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How You Should Play Hologic (HOLX) Ahead of Q2 Earnings
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Hologic Inc. (HOLX - Free Report) is set to report second-quarter fiscal 2024 results on May 2, after the closing bell.
Strong strategic expansion globally is gaining investors’ confidence in Hologic. The company has been undertaking significant efforts to enter new geographies as many of its best-in-class products command a leading share in the domestic market. The company holds a disproportionately low market share internationally, indicating significant untapped potential. In addition, the continued spree of strategic innovation is driving the stock price.
In the last reported quarter, the company’s earnings of 98 cents per share surpassed the Zacks Consensus Estimate by 3.2%. Its earnings surpassed the consensus estimate in each of the trailing four quarters, the average surprise being 8.50%.
Let us delve into the fundamental strength of Hologic ahead of its fiscal second-quarter results.
GYN Surgical Drive the Ascent
Hologic's surgical business has endured a tremendous evolution in recent years. The company emphasizes the relevance of internal innovation and product line expansion through M&A -- a winning strategy across Hologic.
MyoSure and the associated fluid system are projected to have made significant contributions to Hologic's GYN Surgical. The robust performance of the company's most recent NovaSure version, the NovaSure V5, in the second quarter of fiscal 2024 is likely to have helped.
Additionally, we are optimistic about the company's laparoscopic portfolio, which is gaining traction and becoming a bigger source of revenue for the business. The company incorporated Bolder's advanced vessel sealing portfolio and Acessa's process into its product line through acquisitions. We believe that in the to-be-reported quarter, this integration will positively impact the company's top line.
Hologic partnership with the American Association of Gynecologic Laparoscopists ("AAGL") and Inovus Medical is also boosting our confidence in the stock.
Our model predicts HOLX’s GYN Surgical business revenues to grow by 7.8% year over year in the second quarter of 2024.
Other Bullish Factors in the Picture
While the above factors should strongly add to the company’s results in the to-be-reported quarter, there are more to consider.
Growing Panther instrument adoption and an expanded Panther installed base are expected to drive growth in Hologic's Diagnostics division (excluding COVID) in the longer term.
Recent developments in assays like BV, CV/TV and contributions from Amgen and HSV, along with the long-standing women's health menu, are expected to fuel significant growth in Hologic's Molecular Diagnostics business in the coming months.
Hologic’s results are likely to be aided by the launch of the FDA-approved Genius Digital Diagnostics System with the Genius Cervical AI algorithm, which bodes well for the stock.
Further, driven by the strong demand for the company's gantries, Hologic's Breast Health division is anticipated to rise in the second quarter of its fiscal year. Hologic is still able to take advantage of a robust order cadence in the gantry industry.
It’s Not all Blue Skies
Despite the optimistic factors, the Hologic Diagnostics business is expected to be hampered due to significantly lower COVID testing compared with the prior year’s level.
Going by our model, HOLX’s Diagnostics business revenues are likely to have declined 5% year over year in the second quarter of 2024.
Hologic business and the results of operations may continue to be adversely impacted by changes in macroeconomic conditions, including supply disruption stemming from complicated geopolitical conditions globally and rising interest rates.
What Zacks Model Unveils for Q2
Our proven model predicts an earnings beat for Hologic this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: Hologic has an Earnings ESP of +0.34%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Hologic currently carries a Zacks Rank #3.
Estimates Decline Y/Y
However, the Zacks Consensus Estimate for fiscal second-quarter 2024 revenues is pegged at $1.00 billion, suggesting a decline of 2.5% from the prior-year quarter’s figure. The consensus estimate for earnings per share of 97 cents projects an 8.5% year-over-year decline.
Stock Performance
Through the fiscal second quarter, Hologic underperformed the industry in terms of share price performance. The stock rose 9.1% compared with the industry’s 9.3% growth.
Brighter Long-Term Picture
Hologic’s global expansion is a critical element of its growth strategy over the long term. The company is making significant efforts to enter new geographies as many of its best-in-class products command a leading share in the domestic market. The company holds a disproportionately low market share internationally, indicating substantial untapped potential.
Hologic has invested in AI technologies to enhance the diagnostic accuracy of its imaging devices, particularly in the area of mammography. The company has developed AI-driven solutions for remote patient monitoring, enabling personalized and proactive healthcare interventions. With the growing potential of AI in healthcare, Hologic is well-positioned to scoop up growing market opportunities in the coming years.
Estimates for Hologic have moved 1.2% north for the fiscal 2025, raising optimism about the stock.
Current Valuation
Hologic is currently trading at a lower value than the industry’s average. The company has a Price/Earnings F12M ratio of 18.02 compared with the industry’s average of 33.20 and the sector’s 23.05.
Bottom Line
Despite all the upsides discussed above, this is not a good time to buy Hologic as it is currently struggling with macroeconomic odds in the form of mounting costs and supply issues, which are significantly denting the company’s profit margins. Further high interest rate scenario is making the borrowing environment tough for the company. This can gravely impact the company’s R&D over the coming months.
Given this backdrop, it may not be a bad idea to wait for this fundamentally strong stock to offer a better entry point rather than rushing to purchase the stock before May 2.
Other Stocks to Consider
Here are some other medical stocks worth considering:
TransMedics has an expected earnings growth rate of 81.8% for 2024. TMDX surpassed earnings in each of the trailing four quarters, the average being 107.83%.
Inspire Medical Systems (INSP - Free Report) sports a Zacks Rank #1 at present. The company is set to release first-quarter 2024 results on May 7.
INSP has an expected earnings growth rate of 51.4% for 2024 compared with the industry’s 20.3%. The company surpassed earnings in each of the trailing four quarters, the average being 353.55%.
High Tide (HITI - Free Report) currently sports a Zacks Rank #1. The company is expected to release its first-quarter 2024 results on May 6.
HITI has an expected 2024 earnings growth rate of 100% compared with the industry’s 18.3%. The company surpassed earnings in each of the trailing four quarters, the average being 91.67%.
Image: Bigstock
How You Should Play Hologic (HOLX) Ahead of Q2 Earnings
Hologic Inc. (HOLX - Free Report) is set to report second-quarter fiscal 2024 results on May 2, after the closing bell.
Strong strategic expansion globally is gaining investors’ confidence in Hologic. The company has been undertaking significant efforts to enter new geographies as many of its best-in-class products command a leading share in the domestic market. The company holds a disproportionately low market share internationally, indicating significant untapped potential. In addition, the continued spree of strategic innovation is driving the stock price.
In the last reported quarter, the company’s earnings of 98 cents per share surpassed the Zacks Consensus Estimate by 3.2%. Its earnings surpassed the consensus estimate in each of the trailing four quarters, the average surprise being 8.50%.
Let us delve into the fundamental strength of Hologic ahead of its fiscal second-quarter results.
GYN Surgical Drive the Ascent
Hologic's surgical business has endured a tremendous evolution in recent years. The company emphasizes the relevance of internal innovation and product line expansion through M&A -- a winning strategy across Hologic.
MyoSure and the associated fluid system are projected to have made significant contributions to Hologic's GYN Surgical. The robust performance of the company's most recent NovaSure version, the NovaSure V5, in the second quarter of fiscal 2024 is likely to have helped.
Additionally, we are optimistic about the company's laparoscopic portfolio, which is gaining traction and becoming a bigger source of revenue for the business. The company incorporated Bolder's advanced vessel sealing portfolio and Acessa's process into its product line through acquisitions. We believe that in the to-be-reported quarter, this integration will positively impact the company's top line.
Hologic partnership with the American Association of Gynecologic Laparoscopists ("AAGL") and Inovus Medical is also boosting our confidence in the stock.
Our model predicts HOLX’s GYN Surgical business revenues to grow by 7.8% year over year in the second quarter of 2024.
Other Bullish Factors in the Picture
While the above factors should strongly add to the company’s results in the to-be-reported quarter, there are more to consider.
Growing Panther instrument adoption and an expanded Panther installed base are expected to drive growth in Hologic's Diagnostics division (excluding COVID) in the longer term.
Recent developments in assays like BV, CV/TV and contributions from Amgen and HSV, along with the long-standing women's health menu, are expected to fuel significant growth in Hologic's Molecular Diagnostics business in the coming months.
Hologic, Inc. Price and EPS Surprise
Hologic, Inc. price-eps-surprise | Hologic, Inc. Quote
Hologic’s results are likely to be aided by the launch of the FDA-approved Genius Digital Diagnostics System with the Genius Cervical AI algorithm, which bodes well for the stock.
Further, driven by the strong demand for the company's gantries, Hologic's Breast Health division is anticipated to rise in the second quarter of its fiscal year. Hologic is still able to take advantage of a robust order cadence in the gantry industry.
It’s Not all Blue Skies
Despite the optimistic factors, the Hologic Diagnostics business is expected to be hampered due to significantly lower COVID testing compared with the prior year’s level.
Going by our model, HOLX’s Diagnostics business revenues are likely to have declined 5% year over year in the second quarter of 2024.
Hologic business and the results of operations may continue to be adversely impacted by changes in macroeconomic conditions, including supply disruption stemming from complicated geopolitical conditions globally and rising interest rates.
What Zacks Model Unveils for Q2
Our proven model predicts an earnings beat for Hologic this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.
Earnings ESP: Hologic has an Earnings ESP of +0.34%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Hologic currently carries a Zacks Rank #3.
Estimates Decline Y/Y
However, the Zacks Consensus Estimate for fiscal second-quarter 2024 revenues is pegged at $1.00 billion, suggesting a decline of 2.5% from the prior-year quarter’s figure. The consensus estimate for earnings per share of 97 cents projects an 8.5% year-over-year decline.
Stock Performance
Through the fiscal second quarter, Hologic underperformed the industry in terms of share price performance. The stock rose 9.1% compared with the industry’s 9.3% growth.
Brighter Long-Term Picture
Hologic’s global expansion is a critical element of its growth strategy over the long term. The company is making significant efforts to enter new geographies as many of its best-in-class products command a leading share in the domestic market. The company holds a disproportionately low market share internationally, indicating substantial untapped potential.
Hologic has invested in AI technologies to enhance the diagnostic accuracy of its imaging devices, particularly in the area of mammography. The company has developed AI-driven solutions for remote patient monitoring, enabling personalized and proactive healthcare interventions. With the growing potential of AI in healthcare, Hologic is well-positioned to scoop up growing market opportunities in the coming years.
Estimates for Hologic have moved 1.2% north for the fiscal 2025, raising optimism about the stock.
Current Valuation
Hologic is currently trading at a lower value than the industry’s average. The company has a Price/Earnings F12M ratio of 18.02 compared with the industry’s average of 33.20 and the sector’s 23.05.
Bottom Line
Despite all the upsides discussed above, this is not a good time to buy Hologic as it is currently struggling with macroeconomic odds in the form of mounting costs and supply issues, which are significantly denting the company’s profit margins. Further high interest rate scenario is making the borrowing environment tough for the company. This can gravely impact the company’s R&D over the coming months.
Given this backdrop, it may not be a bad idea to wait for this fundamentally strong stock to offer a better entry point rather than rushing to purchase the stock before May 2.
Other Stocks to Consider
Here are some other medical stocks worth considering:
TransMedics Group (TMDX - Free Report) sports a Zacks Rank #1. The company is set to release first-quarter 2024 results on Apr 30. You can see the complete list of today’s Zacks #1 Rank stocks here.
TransMedics has an expected earnings growth rate of 81.8% for 2024. TMDX surpassed earnings in each of the trailing four quarters, the average being 107.83%.
Inspire Medical Systems (INSP - Free Report) sports a Zacks Rank #1 at present. The company is set to release first-quarter 2024 results on May 7.
INSP has an expected earnings growth rate of 51.4% for 2024 compared with the industry’s 20.3%. The company surpassed earnings in each of the trailing four quarters, the average being 353.55%.
High Tide (HITI - Free Report) currently sports a Zacks Rank #1. The company is expected to release its first-quarter 2024 results on May 6.
HITI has an expected 2024 earnings growth rate of 100% compared with the industry’s 18.3%. The company surpassed earnings in each of the trailing four quarters, the average being 91.67%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.