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Should You Bet on HOLX Stock This Breast Cancer Awareness Month?
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October is celebrated as breast cancer awareness month annually, and Hologic (HOLX - Free Report) , this time too, honored the occasion by ringing the Nasdaq opening bell for the 18th consecutive time. While celebrating this yearly tradition, the company came into the limelight as it also introduced a comprehensive education campaign aimed at debunking common myths about breast cancer, mammograms and breast density. Aptly named #BustTheMyth, the program stresses the need for practical education alongside cutting-edge technology to tackle the alarming breast cancer statistics. The FDA’s latest favorable update on Mammography Regulations has further boosted investors’ sentiment for HOLX.
Closing at $80.26 yesterday, Hologic shares have been hovering 5.2% near its 52-week high of $84.67. From a technical perspective, the stock has been consistently trading above its 90 and 200-day simple moving averages (SMA), signaling a positive long-term trend.
HOLX Above 90 and 200-day SMA
Image Source: Zacks Investment Research
Among Hologic’s diverse set of businesses, the Breast Health segment has undergone a significant shift over the years — from being primarily a gantry-focused business to bringing more recurring service revenues, which now make up a larger share of the division. Let’s take a closer look at how the portfolio stands at present and assess the impact of recent developments. But will these changes influence investors’ decisions regarding the stock’s position in their portfolios?
New Guideline Recommendations Set to Favor Hologic
The FDA’s latest updates to the Mammography Regulations have put breast density at the center of women’s health discussions. Effective since Sept. 10, all mammography facilities are required to inform patients about their breast density and include an overall assessment in the reports sent to healthcare providers. Women with dense breast tissue are perceived to be at higher risk of developing breast cancer, although the causes remain unclear. Dense breast tissue makes it difficult for radiologists to detect cancer on standard mammograms, prompting the need for additional imaging tests like 3D mammograms (tomosynthesis), ultrasound or MRIs (magnetic resource imaging).
Hologic continues to stand out in the thriving global mammography market, valued at $2.35 billion in 2023 by Grand View Research, driven by improvements in accuracy & efficiency through advanced technologies. The company’s Genius 3D Mammography exam was FDA-approved in 2017 as superior to standard 2D mammography for routine screening of women with dense breasts. Another breakthrough, its Genius AI Detection technology, is essentially a deep-learning algorithm that helps radiologists detect breast cancers in their early stages when used with the Genius 3D Mammography exam.
The USPSTF (United States Preventive Services Task Force) updated its guidelines for breast cancer screening in April 2024, advising women to start screening at 40 and continue biannually through 74. With women likely to start at a younger age, we assume this could substantially boost Hologic’s sales of mammography solutions.
A Snapshot of Hologic’s Breast Health Franchise
The company has significantly expanded the breast Health product offering from imaging to cover the entire continuum of breast cancer care, including biopsy and surgery. In the third quarter of fiscal 2024, Breast Health revenues increased 8.2% year over year in constant currency (excluding the divested SSI ultrasound imaging business). Growth was largely driven by Breast Imaging, which delivered impressive 7.2% domestic growth and a remarkable 12.1% rise internationally.
The gantry business is pacing up to recover fully from the global semiconductor chip shortage, supported by a stronger supply chain. Hologic has been benefitting from a strong cadence of gantry orders and remains optimistic about closing the year with a higher number of shipments. The robust service revenues from an expanded installed base also contribute meaningfully to the division’s growth. Meanwhile, the company is also developing a next-generation gantry that will focus on workflow, patient experience and image quality, with AI playing a key role in driving these innovations.
Hologic’s latest acquisition of Endomagnetics Ltd. creates a valuable opportunity to enhance the interventional breast care options for women, adding cutting-edge breast surgery localization and lymphatic tracing products to the portfolio. Endomag is expected to add nearly $4 million to $5 million of revenues in fiscal 2024 and eventually be accretive to Hologic’s revenues, margins and EPS over time.
What’s Affecting Hologic?
While the Breast Health division seems well-positioned to hold on to its market leadership, Hologic’s Skeletal Health business is struggling. The ongoing halt in shipments of Horizon DXA systems, resulting from a non-conformance regarding the electromagnetic compatibility requirements, led to a nearly 30% decline in the revenues in the third quarter of fiscal 2024. HOLX had adjusted the midpoint of its fiscal 2024 revenue projections by $5 million, reflecting a nearly $20 million setback from the ongoing issues. Declining COVID-19 assay sales continue to be a headwind within its Diagnostics business.
HOLX Stock Price Performance
In the past three months, Hologic shares have risen 5.9%, significantly outperforming the 1.2% growth of the industry and the Zacks Medical sector’s 0.1% jump. The stock also performed better in comparison to the S&P 500 composite’s gain of 0.4%.
Three-Month Price Performance
Image Source: Zacks Investment Research
HOLX Stock Appears Undervalued
From a valuation standpoint, Hologic’s forward 12-month price-to-earnings (P/E) ratio sits at 18.05, lower than the industry average of 32.3.
P/E Ratio Forward Twelve Months (F12M)
Image Source: Zacks Investment Research
The stock is also trading at a discount relative to its industry peers such as QIAGEN (QGEN - Free Report) and Abbott Laboratories Inc. (ABT - Free Report) . Hologic holds a Value Score of B at present.
How to Play HOLX Stock Now?
We are upbeat about Hologic’s Breast Health franchise due to the strong demand for its products and services, as well as the potential of its new buyout. In this breast cancer awareness month, the company’s new resourceful campaign to debunk common myths about the disease is likely to help more women understand their risks and make confident decisions about their health.
However, the ongoing issues within the segments can be a drag for HOLX, which currently has a Zacks Rank #3 (Hold). Potential investors may want to wait for a better entry point. Given the stock’s attractive valuation, existing investors may consider holding it. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Should You Bet on HOLX Stock This Breast Cancer Awareness Month?
October is celebrated as breast cancer awareness month annually, and Hologic (HOLX - Free Report) , this time too, honored the occasion by ringing the Nasdaq opening bell for the 18th consecutive time. While celebrating this yearly tradition, the company came into the limelight as it also introduced a comprehensive education campaign aimed at debunking common myths about breast cancer, mammograms and breast density. Aptly named #BustTheMyth, the program stresses the need for practical education alongside cutting-edge technology to tackle the alarming breast cancer statistics. The FDA’s latest favorable update on Mammography Regulations has further boosted investors’ sentiment for HOLX.
Closing at $80.26 yesterday, Hologic shares have been hovering 5.2% near its 52-week high of $84.67. From a technical perspective, the stock has been consistently trading above its 90 and 200-day simple moving averages (SMA), signaling a positive long-term trend.
HOLX Above 90 and 200-day SMA
Image Source: Zacks Investment Research
Among Hologic’s diverse set of businesses, the Breast Health segment has undergone a significant shift over the years — from being primarily a gantry-focused business to bringing more recurring service revenues, which now make up a larger share of the division. Let’s take a closer look at how the portfolio stands at present and assess the impact of recent developments. But will these changes influence investors’ decisions regarding the stock’s position in their portfolios?
New Guideline Recommendations Set to Favor Hologic
The FDA’s latest updates to the Mammography Regulations have put breast density at the center of women’s health discussions. Effective since Sept. 10, all mammography facilities are required to inform patients about their breast density and include an overall assessment in the reports sent to healthcare providers. Women with dense breast tissue are perceived to be at higher risk of developing breast cancer, although the causes remain unclear. Dense breast tissue makes it difficult for radiologists to detect cancer on standard mammograms, prompting the need for additional imaging tests like 3D mammograms (tomosynthesis), ultrasound or MRIs (magnetic resource imaging).
Hologic continues to stand out in the thriving global mammography market, valued at $2.35 billion in 2023 by Grand View Research, driven by improvements in accuracy & efficiency through advanced technologies. The company’s Genius 3D Mammography exam was FDA-approved in 2017 as superior to standard 2D mammography for routine screening of women with dense breasts. Another breakthrough, its Genius AI Detection technology, is essentially a deep-learning algorithm that helps radiologists detect breast cancers in their early stages when used with the Genius 3D Mammography exam.
The USPSTF (United States Preventive Services Task Force) updated its guidelines for breast cancer screening in April 2024, advising women to start screening at 40 and continue biannually through 74. With women likely to start at a younger age, we assume this could substantially boost Hologic’s sales of mammography solutions.
A Snapshot of Hologic’s Breast Health Franchise
The company has significantly expanded the breast Health product offering from imaging to cover the entire continuum of breast cancer care, including biopsy and surgery. In the third quarter of fiscal 2024, Breast Health revenues increased 8.2% year over year in constant currency (excluding the divested SSI ultrasound imaging business). Growth was largely driven by Breast Imaging, which delivered impressive 7.2% domestic growth and a remarkable 12.1% rise internationally.
The gantry business is pacing up to recover fully from the global semiconductor chip shortage, supported by a stronger supply chain. Hologic has been benefitting from a strong cadence of gantry orders and remains optimistic about closing the year with a higher number of shipments. The robust service revenues from an expanded installed base also contribute meaningfully to the division’s growth. Meanwhile, the company is also developing a next-generation gantry that will focus on workflow, patient experience and image quality, with AI playing a key role in driving these innovations.
Hologic’s latest acquisition of Endomagnetics Ltd. creates a valuable opportunity to enhance the interventional breast care options for women, adding cutting-edge breast surgery localization and lymphatic tracing products to the portfolio. Endomag is expected to add nearly $4 million to $5 million of revenues in fiscal 2024 and eventually be accretive to Hologic’s revenues, margins and EPS over time.
What’s Affecting Hologic?
While the Breast Health division seems well-positioned to hold on to its market leadership, Hologic’s Skeletal Health business is struggling. The ongoing halt in shipments of Horizon DXA systems, resulting from a non-conformance regarding the electromagnetic compatibility requirements, led to a nearly 30% decline in the revenues in the third quarter of fiscal 2024. HOLX had adjusted the midpoint of its fiscal 2024 revenue projections by $5 million, reflecting a nearly $20 million setback from the ongoing issues. Declining COVID-19 assay sales continue to be a headwind within its Diagnostics business.
HOLX Stock Price Performance
In the past three months, Hologic shares have risen 5.9%, significantly outperforming the 1.2% growth of the industry and the Zacks Medical sector’s 0.1% jump. The stock also performed better in comparison to the S&P 500 composite’s gain of 0.4%.
Three-Month Price Performance
Image Source: Zacks Investment Research
HOLX Stock Appears Undervalued
From a valuation standpoint, Hologic’s forward 12-month price-to-earnings (P/E) ratio sits at 18.05, lower than the industry average of 32.3.
P/E Ratio Forward Twelve Months (F12M)
Image Source: Zacks Investment Research
The stock is also trading at a discount relative to its industry peers such as QIAGEN (QGEN - Free Report) and Abbott Laboratories Inc. (ABT - Free Report) . Hologic holds a Value Score of B at present.
How to Play HOLX Stock Now?
We are upbeat about Hologic’s Breast Health franchise due to the strong demand for its products and services, as well as the potential of its new buyout. In this breast cancer awareness month, the company’s new resourceful campaign to debunk common myths about the disease is likely to help more women understand their risks and make confident decisions about their health.
However, the ongoing issues within the segments can be a drag for HOLX, which currently has a Zacks Rank #3 (Hold). Potential investors may want to wait for a better entry point. Given the stock’s attractive valuation, existing investors may consider holding it. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.