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Should You Hold Hologic (HOLX) Stock in Your Portfolio Now?
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Hologic, Inc.'s (HOLX - Free Report) robust strength in the molecular diagnostics business places it well for growth in the upcoming quarters. The company’s Breast Health franchise is now more diverse with the newest acquisition. Sound financial stability also bodes well.
Meanwhile, the impact of macroeconomic conditions and adverse currency fluctuations remain a concern for Hologic’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has rallied 8.2% compared with the 11.8% growth of the industry and a 26.3% rise of the S&P 500.
The renowned medical device company has a market capitalization of $18.93 billion. Hologicsurpassed earnings estimates in each of the trailing four quarters, delivering an average surprise of 4.5%.
Let’s delve deeper.
Factors at Play
Molecular Diagnostics Growth Continues: Hologic’s diagnostics suite is led by the molecular diagnostic assays, which run on advanced instrumentation systems (Panther, Panther Fusion and Tigris), the ThinPrep cytology system and the Rapid Fetal Fibronectin Test. The Molecular Diagnostics business has consistently maintained high-single to double-digit gains in 13 of the last 15 quarters, attributed to the ongoing adoption and utilization of the broad menu on the Panther platform.
The BV/CV/TV assay has grown to become the second largest worldwide due to its robust underlying strength. The Biotheranostics business also remains crucial to the Molecular business. At a global level, STI testing represents the company’s largest category in molecular diagnostics and also represents a significant growth opportunity.
Strength in Breast Health: Hologic expanded its Breast Health product offering from imaging to cover the continuum of breast cancer care, including biopsy and surgery. In the third quarter of fiscal 2024, the segment’s performance was fueled by increased gantry shipments and robust Service revenue growth. With a robust demand for its product and service portfolio and solid visibility into gantry orders, the company confidently aims to deliver more gantries this year than the last fiscal.
Image Source: Zacks Investment Research
The recent acquisition of Endomagnetics has added innovative solutions to the portfolio, bolstering capabilities in the growing field of interventional breast surgery market. Additionally, Hologic’s mammography technologies will be combined with Bayer’s leading MEDRAD Stellant FLEX Computed Tomography Injection System to deliver a coordinated solution for contrast-enhanced mammography (CEM).
Strong Solvency and Capital Structure: Hologic ended the third quarter of fiscal 2024 with cash and cash equivalents of $2.44 billion and a short-term debt payable of $37.5 million on its balance sheet. This is a positive indicator for the company amid the ongoing economic downturn, as it is holding sufficient cash for debt repayment.
Total long-term debt (including the current portion) was $2.54 billion, slightly down from $2.55 billion in the second quarter of fiscal 2024. However, times interest earned stood at 7.7X at the third quarter-end, sequentially up 1.8%.
Downsides
Macroeconomic Concerns: Global economic concerns and uncertainties have increased market volatility and reduced growth expectations. These have also impacted the costs and sales of Hologic’s products in certain countries in recent times. In the third quarter of fiscal 2024, Hologic’s cost of revenues (product, service and other) rose about 1.9% year over year, while selling, general and administration expenses increased 4.2%.
Foreign Exchange Headwinds: We remain worried about the significant challenges Hologic faced due to the unfavorable foreign currency impact that has been adversely affecting the company’s overall performance in the past few quarters. Changes in currency exchange rates, particularly the increase in the value of the dollar, may reduce the reported value of Hologic’s revenues outside the United States and associated cash flows. HOLX expects about a $3 million adverse currency impact in the fourth quarter.
Estimate Trends
In the past 30 days, the Zacks Consensus Estimate for Hologic’s fiscal 2024 earnings has remained constant at $4.08 per share.
The Zacks Consensus Estimate for HOLX’s fiscal 2024 revenues is pegged at $4.03 billion, which suggests a 0.1% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , Boston Scientific (BSX - Free Report) and Myriad Genetics (MYGN - Free Report) .
TransMedix Group’s earnings are expected to surge 255.8% in 2024. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Its shares have soared 155.9% compared with the industry’s 11.8% rise in the past year.
Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated earnings growth rate of 17.1% compared with the industry’s 15.7%. Shares of the company have rallied 56% compared with the industry’s 11.1% rise over the past year.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
Myriad Genetics, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 51.3% compared with the industry’s 21.6%. Shares of the company have soared 59.3% against the industry’s 3.1% fall over the past year.
MYGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 213.4%.
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Should You Hold Hologic (HOLX) Stock in Your Portfolio Now?
Hologic, Inc.'s (HOLX - Free Report) robust strength in the molecular diagnostics business places it well for growth in the upcoming quarters. The company’s Breast Health franchise is now more diverse with the newest acquisition. Sound financial stability also bodes well.
Meanwhile, the impact of macroeconomic conditions and adverse currency fluctuations remain a concern for Hologic’s operations.
In the past year, this Zacks Rank #3 (Hold) stock has rallied 8.2% compared with the 11.8% growth of the industry and a 26.3% rise of the S&P 500.
The renowned medical device company has a market capitalization of $18.93 billion. Hologicsurpassed earnings estimates in each of the trailing four quarters, delivering an average surprise of 4.5%.
Let’s delve deeper.
Factors at Play
Molecular Diagnostics Growth Continues: Hologic’s diagnostics suite is led by the molecular diagnostic assays, which run on advanced instrumentation systems (Panther, Panther Fusion and Tigris), the ThinPrep cytology system and the Rapid Fetal Fibronectin Test. The Molecular Diagnostics business has consistently maintained high-single to double-digit gains in 13 of the last 15 quarters, attributed to the ongoing adoption and utilization of the broad menu on the Panther platform.
The BV/CV/TV assay has grown to become the second largest worldwide due to its robust underlying strength. The Biotheranostics business also remains crucial to the Molecular business. At a global level, STI testing represents the company’s largest category in molecular diagnostics and also represents a significant growth opportunity.
Strength in Breast Health: Hologic expanded its Breast Health product offering from imaging to cover the continuum of breast cancer care, including biopsy and surgery. In the third quarter of fiscal 2024, the segment’s performance was fueled by increased gantry shipments and robust Service revenue growth. With a robust demand for its product and service portfolio and solid visibility into gantry orders, the company confidently aims to deliver more gantries this year than the last fiscal.
Image Source: Zacks Investment Research
The recent acquisition of Endomagnetics has added innovative solutions to the portfolio, bolstering capabilities in the growing field of interventional breast surgery market. Additionally, Hologic’s mammography technologies will be combined with Bayer’s leading MEDRAD Stellant FLEX Computed Tomography Injection System to deliver a coordinated solution for contrast-enhanced mammography (CEM).
Strong Solvency and Capital Structure: Hologic ended the third quarter of fiscal 2024 with cash and cash equivalents of $2.44 billion and a short-term debt payable of $37.5 million on its balance sheet. This is a positive indicator for the company amid the ongoing economic downturn, as it is holding sufficient cash for debt repayment.
Total long-term debt (including the current portion) was $2.54 billion, slightly down from $2.55 billion in the second quarter of fiscal 2024. However, times interest earned stood at 7.7X at the third quarter-end, sequentially up 1.8%.
Downsides
Macroeconomic Concerns: Global economic concerns and uncertainties have increased market volatility and reduced growth expectations. These have also impacted the costs and sales of Hologic’s products in certain countries in recent times. In the third quarter of fiscal 2024, Hologic’s cost of revenues (product, service and other) rose about 1.9% year over year, while selling, general and administration expenses increased 4.2%.
Foreign Exchange Headwinds: We remain worried about the significant challenges Hologic faced due to the unfavorable foreign currency impact that has been adversely affecting the company’s overall performance in the past few quarters. Changes in currency exchange rates, particularly the increase in the value of the dollar, may reduce the reported value of Hologic’s revenues outside the United States and associated cash flows. HOLX expects about a $3 million adverse currency impact in the fourth quarter.
Estimate Trends
In the past 30 days, the Zacks Consensus Estimate for Hologic’s fiscal 2024 earnings has remained constant at $4.08 per share.
The Zacks Consensus Estimate for HOLX’s fiscal 2024 revenues is pegged at $4.03 billion, which suggests a 0.1% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , Boston Scientific (BSX - Free Report) and Myriad Genetics (MYGN - Free Report) .
TransMedix Group’s earnings are expected to surge 255.8% in 2024. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Its shares have soared 155.9% compared with the industry’s 11.8% rise in the past year.
TMDX sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated earnings growth rate of 17.1% compared with the industry’s 15.7%. Shares of the company have rallied 56% compared with the industry’s 11.1% rise over the past year.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
Myriad Genetics, carrying a Zacks Rank #2 at present, has an estimated long-term earnings growth rate of 51.3% compared with the industry’s 21.6%. Shares of the company have soared 59.3% against the industry’s 3.1% fall over the past year.
MYGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 213.4%.