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Hologic (HOLX) Down 4.4% Since Last Earnings Report: Can It Rebound?
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A month has gone by since the last earnings report for Hologic (HOLX - Free Report) . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hologic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hologic Q2 Earnings Miss Estimates, Margins Rise
Hologic reported second-quarter fiscal 2021 adjusted earnings per share of $2.59, up 354.4% year over year. However, the bottom line lagged the Zacks Consensus Estimate by 1.2%.
The adjustments include charges and benefits related to amortization of acquired intangible assets, MDR expenses, and restructuring and integration/consolidation costs, to name a few.
The company’s GAAP earnings per share was $2.38 in the quarter compared with the year-ago earnings per share of 36 cents, reflecting a stupendous 561.1% improvement.
Revenues in Detail
Revenues grossed $1.54 billion in the reported quarter, up 103.4% year over year (up 98.7% at CER). The metric again lagged the Zacks Consensus Estimate by 0.4%.
Organic revenues (excluding divested Blood business and buyouts of Acessa, Biotheranostics and Diagenode) of $1.52 billion increased 104.7% year over year and 100% at CER.
U.S. revenues of $1.06 billion rose 85.1%, whereas international revenues of $473.6 million improved 161.4% year over year or 142.2% at CER.
Organically, revenues in the United States rose 86.8% year over year to $1.05 billion in the quarter. International revenues were up 159.9% year over year (up 140.7% at CER) to $470.9 million.
Segments in Detail
Revenues at the Diagnostics segment rose 233.4% year over year (up 225.2% at CER) to $1.06 billion in the quarter under review, with Molecular Diagnostics being the major driver. Molecular Diagnostics’ revenues of $935.3 million climbed 390.6% (up 378.4% at CER), continuing the division’s strong performance. However, Blood Screening revenues of $12 million fell 21.3% year over year and at CER.
Revenues at the Breast Health segment improved 9.3% from the year-ago period (up 7.3% at CER) to $336.3 million. This primarily resulted from a robust product portfolio and the strong demand for Brevera following its relaunch. Impressive performances by the segment’s Breast Imaging and interventional businesses also drove the top line.
Domestic sales in this segment registered an improvement in the quarter, with 7.9% revenue uptick year over year. Further, outside the United States, Breast Health sales improved by 13.6% on a reported basis and 5.3% at CER.
Revenues at the GYN Surgical business rose 8.4% year over year (up 6.6% at CER) to $114.2 million, while revenues at Skeletal Health fell 4.8% year over year (down 6.8% at CER) to $22.6 million.
Operational Update
In fiscal second quarter, the company-reported adjusted gross margin expanded 1,400 basis points (bps) to 75%. According to the company, the benefits resulted from sales of SARS-CoV-2 tests.
Adjusted operating expenses amounted to $277.7 million, up 24.8% year over year. The company-reported adjusted operating margin expanded 2,540 basis points to 56.9%.
Financial Update
Hologic ended fiscal second-quarter 2021 with cash and cash equivalents of $816.4 million compared with $868.7 million at the end of first-quarter fiscal 2021. Total long-term debt (including current portion) was $2.75 billion at the end of the second quarter of fiscal 2021 compared with $2.76 billion at the end of first quarter of fiscal 2021.
Cumulative net cash provided by operating activities at the end of second-quarter fiscal 2021 was $1.20 billion compared with $231.6 million a year ago.
Guidance
Hologic, boosted by the strength in its COVID-19 tests and the ongoing recovery of its other divisions, has provided the financial guidance for third-quarter fiscal 2021.
The company projects revenues within $1 billion-$1.07 million (projection of 21.5-30 % growth rate). The growth rate is projected in the range of 17.9-26.4% at CER and within 15.1-23.6% organically. The Zacks Consensus Estimate for third-quarter fiscal 2021 revenues is pegged at $1.31 billion.
The adjusted earnings per share is estimated within $1.00-$1.15, with projected growth of 33.3-53.3%. The Zacks Consensus Estimate for second-quarter fiscal 2021 earnings per share is pegged at $1.81.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -39.26% due to these changes.
VGM Scores
At this time, Hologic has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hologic has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Hologic (HOLX) Down 4.4% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for Hologic (HOLX - Free Report) . Shares have lost about 4.4% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hologic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hologic Q2 Earnings Miss Estimates, Margins Rise
Hologic reported second-quarter fiscal 2021 adjusted earnings per share of $2.59, up 354.4% year over year. However, the bottom line lagged the Zacks Consensus Estimate by 1.2%.
The adjustments include charges and benefits related to amortization of acquired intangible assets, MDR expenses, and restructuring and integration/consolidation costs, to name a few.
The company’s GAAP earnings per share was $2.38 in the quarter compared with the year-ago earnings per share of 36 cents, reflecting a stupendous 561.1% improvement.
Revenues in Detail
Revenues grossed $1.54 billion in the reported quarter, up 103.4% year over year (up 98.7% at CER). The metric again lagged the Zacks Consensus Estimate by 0.4%.
Organic revenues (excluding divested Blood business and buyouts of Acessa, Biotheranostics and Diagenode) of $1.52 billion increased 104.7% year over year and 100% at CER.
U.S. revenues of $1.06 billion rose 85.1%, whereas international revenues of $473.6 million improved 161.4% year over year or 142.2% at CER.
Organically, revenues in the United States rose 86.8% year over year to $1.05 billion in the quarter. International revenues were up 159.9% year over year (up 140.7% at CER) to $470.9 million.
Segments in Detail
Revenues at the Diagnostics segment rose 233.4% year over year (up 225.2% at CER) to $1.06 billion in the quarter under review, with Molecular Diagnostics being the major driver. Molecular Diagnostics’ revenues of $935.3 million climbed 390.6% (up 378.4% at CER), continuing the division’s strong performance. However, Blood Screening revenues of $12 million fell 21.3% year over year and at CER.
Revenues at the Breast Health segment improved 9.3% from the year-ago period (up 7.3% at CER) to $336.3 million. This primarily resulted from a robust product portfolio and the strong demand for Brevera following its relaunch. Impressive performances by the segment’s Breast Imaging and interventional businesses also drove the top line.
Domestic sales in this segment registered an improvement in the quarter, with 7.9% revenue uptick year over year. Further, outside the United States, Breast Health sales improved by 13.6% on a reported basis and 5.3% at CER.
Revenues at the GYN Surgical business rose 8.4% year over year (up 6.6% at CER) to $114.2 million, while revenues at Skeletal Health fell 4.8% year over year (down 6.8% at CER) to $22.6 million.
Operational Update
In fiscal second quarter, the company-reported adjusted gross margin expanded 1,400 basis points (bps) to 75%. According to the company, the benefits resulted from sales of SARS-CoV-2 tests.
Adjusted operating expenses amounted to $277.7 million, up 24.8% year over year. The company-reported adjusted operating margin expanded 2,540 basis points to 56.9%.
Financial Update
Hologic ended fiscal second-quarter 2021 with cash and cash equivalents of $816.4 million compared with $868.7 million at the end of first-quarter fiscal 2021. Total long-term debt (including current portion) was $2.75 billion at the end of the second quarter of fiscal 2021 compared with $2.76 billion at the end of first quarter of fiscal 2021.
Cumulative net cash provided by operating activities at the end of second-quarter fiscal 2021 was $1.20 billion compared with $231.6 million a year ago.
Guidance
Hologic, boosted by the strength in its COVID-19 tests and the ongoing recovery of its other divisions, has provided the financial guidance for third-quarter fiscal 2021.
The company projects revenues within $1 billion-$1.07 million (projection of 21.5-30 % growth rate). The growth rate is projected in the range of 17.9-26.4% at CER and within 15.1-23.6% organically. The Zacks Consensus Estimate for third-quarter fiscal 2021 revenues is pegged at $1.31 billion.
The adjusted earnings per share is estimated within $1.00-$1.15, with projected growth of 33.3-53.3%. The Zacks Consensus Estimate for second-quarter fiscal 2021 earnings per share is pegged at $1.81.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -39.26% due to these changes.
VGM Scores
At this time, Hologic has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Hologic has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.