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Here's Why You Should Retain Hologic (HOLX) Stock for Now
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Hologic, Inc. (HOLX - Free Report) has been gaining from strength in the core molecular diagnostics franchise. The company’s efforts to expand international operations buoy optimism. Robust performance by the GYN Surgical business is another upside. However, forex woes and declining COVID-19 revenues raise apprehension.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 3.1% compared with the 4.8% rise of the industry and 15.7% increase of the S&P 500.
The renowned medical device company has a market capitalization of $19.17 billion. Its earnings for first-quarter fiscal 2022 surpassed the Zacks Consensus Estimate by 80.8%.
Over the past five years, the company’s earnings have registered a 34.1% increase, way ahead of the industry’s 8.8% rise and the S&P 500’s 2.8% increase. The company’s long-term expected growth is estimated at 12.8%, compared with the industry’s growth expectation of 15.1% and the S&P 500’s estimated 11.4% growth.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Molecular Diagnostics Grows: Hologic’s core molecular diagnostics franchise grew 14% worldwide in the fiscal first quarter despite lower COVID-19 tests sales. Revenues at the Cytology & Perinatal rose 5.2% at CER. During the quarter, the company registered $523 million in COVID-19 assay sales, over $300 million more than its outlook and shipped about 26 million tests to customers. The United States represented about 60% of total COVID-19 assay revenues, although demand was high worldwide. The addition of the Novodiag system to Hologic’s diagnostic molecular scalable solutions portfolio is expected to broaden its customer base in Europe.
Strength in GYN Surgical: We are upbeat about Hologic’s GYN Surgical business which recorded revenue growth of 8.3% year over year in the fiscal first quarter. On its earnings call for the reported quarter, the company noted that it continues to solidify its market-leading positions for NovaSure and MyoSure. Meanwhile, the addition of the Acessa procedure and the completion of the Bolder acquisition position the business for growth. The recent launch of NovaSure Version 5 developed in-house also exhibited good traction.
Focus on International Operations: Hologic’s international sales have been a major catalyst over the past three years. During the fiscal first quarter, the international business registered 13% growth on an organic basis. The company has been progressing impressively with respect to the placement of Panther instruments across the globe. The current Panther installed base stands at almost 3000 worldwide, 75% larger than before the pandemic.
In addition, Hologic is expanding internationally in breast health, focusing on continuing to gain market share with the existing 3D and upgradable 2D mammography products.
Downsides
Forex Woes: Hologic is susceptible to foreign exchange headwinds. Unfavorable foreign currency impact has been affecting the company’s overall performance in the past few quarters.
COVID-19 Revenue Uncertainty: Hologic is currently witnessing a decline in its COVID-19 testing revenues following the vaccine rollout. This might significantly affect the company’s revenues.
Weak Solvency: Hologic ended the first quarter of fiscal 2022 with cash and cash equivalents of $1.42 billion. Total long-term debt (including the current portion) came in at $3.07 billion at the end of the fiscal first quarter, much higher than the quarter-end cash and cash equivalent level, indicating weak solvency.
Estimate Trend
Hologic has been witnessing a positive estimate revision trend for fiscal year 2022. Over the past 90 days, the Zacks Consensus Estimate for Hologic’s fiscal 2022 earnings has moved 37.8% north to $5.10.
The Zacks Consensus Estimate for its fiscal 2022 revenues is pegged at $4.39 billion, suggesting a 21.9% fall from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 43.2% versus the 53% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2 (Buy).
Henry Schein has outperformed the industry over the past year. HSIC has gained 26.9% compared with the industry’s 10.7% rise over the past year.
McKesson has a long-term earnings growth rate of 11.8%. McKesson’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 20.6%, on average. It presently carries a Zacks Rank #2.
McKesson has outperformed the industry over the past year. MCK has gained 57.4% in the said period compared with 10.7% growth of the industry.
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Here's Why You Should Retain Hologic (HOLX) Stock for Now
Hologic, Inc. (HOLX - Free Report) has been gaining from strength in the core molecular diagnostics franchise. The company’s efforts to expand international operations buoy optimism. Robust performance by the GYN Surgical business is another upside. However, forex woes and declining COVID-19 revenues raise apprehension.
Over the past year, the Zacks Rank #3 (Hold) stock has gained 3.1% compared with the 4.8% rise of the industry and 15.7% increase of the S&P 500.
The renowned medical device company has a market capitalization of $19.17 billion. Its earnings for first-quarter fiscal 2022 surpassed the Zacks Consensus Estimate by 80.8%.
Over the past five years, the company’s earnings have registered a 34.1% increase, way ahead of the industry’s 8.8% rise and the S&P 500’s 2.8% increase. The company’s long-term expected growth is estimated at 12.8%, compared with the industry’s growth expectation of 15.1% and the S&P 500’s estimated 11.4% growth.
Image Source: Zacks Investment Research
Let’s delve deeper.
Factors At Play
Molecular Diagnostics Grows: Hologic’s core molecular diagnostics franchise grew 14% worldwide in the fiscal first quarter despite lower COVID-19 tests sales. Revenues at the Cytology & Perinatal rose 5.2% at CER. During the quarter, the company registered $523 million in COVID-19 assay sales, over $300 million more than its outlook and shipped about 26 million tests to customers. The United States represented about 60% of total COVID-19 assay revenues, although demand was high worldwide. The addition of the Novodiag system to Hologic’s diagnostic molecular scalable solutions portfolio is expected to broaden its customer base in Europe.
Strength in GYN Surgical: We are upbeat about Hologic’s GYN Surgical business which recorded revenue growth of 8.3% year over year in the fiscal first quarter. On its earnings call for the reported quarter, the company noted that it continues to solidify its market-leading positions for NovaSure and MyoSure. Meanwhile, the addition of the Acessa procedure and the completion of the Bolder acquisition position the business for growth. The recent launch of NovaSure Version 5 developed in-house also exhibited good traction.
Focus on International Operations: Hologic’s international sales have been a major catalyst over the past three years. During the fiscal first quarter, the international business registered 13% growth on an organic basis. The company has been progressing impressively with respect to the placement of Panther instruments across the globe. The current Panther installed base stands at almost 3000 worldwide, 75% larger than before the pandemic.
In addition, Hologic is expanding internationally in breast health, focusing on continuing to gain market share with the existing 3D and upgradable 2D mammography products.
Downsides
Forex Woes: Hologic is susceptible to foreign exchange headwinds. Unfavorable foreign currency impact has been affecting the company’s overall performance in the past few quarters.
COVID-19 Revenue Uncertainty: Hologic is currently witnessing a decline in its COVID-19 testing revenues following the vaccine rollout. This might significantly affect the company’s revenues.
Weak Solvency: Hologic ended the first quarter of fiscal 2022 with cash and cash equivalents of $1.42 billion. Total long-term debt (including the current portion) came in at $3.07 billion at the end of the fiscal first quarter, much higher than the quarter-end cash and cash equivalent level, indicating weak solvency.
Estimate Trend
Hologic has been witnessing a positive estimate revision trend for fiscal year 2022. Over the past 90 days, the Zacks Consensus Estimate for Hologic’s fiscal 2022 earnings has moved 37.8% north to $5.10.
The Zacks Consensus Estimate for its fiscal 2022 revenues is pegged at $4.39 billion, suggesting a 21.9% fall from the year-ago reported number.
Key Picks
A few better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Henry Schein, Inc. (HSIC - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare has a long-term earnings growth rate of 16.2%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 19.5%, on average. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 43.2% versus the 53% industry decline.
Henry Schein has an estimated long-term growth rate of 11.8%. Henry Schein’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2 (Buy).
Henry Schein has outperformed the industry over the past year. HSIC has gained 26.9% compared with the industry’s 10.7% rise over the past year.
McKesson has a long-term earnings growth rate of 11.8%. McKesson’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 20.6%, on average. It presently carries a Zacks Rank #2.
McKesson has outperformed the industry over the past year. MCK has gained 57.4% in the said period compared with 10.7% growth of the industry.