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Hologic (HOLX) Up 5.4% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Hologic (HOLX - Free Report) . Shares have added about 5.4% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Hologic due for a pullback? 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 catalysts.

Hologic Q4 Earnings Surpass Estimates, 2022 View Dull

Hologic reported fourth-quarter fiscal 2021 adjusted earnings per share of $1.61, down 22.2% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 64.3%.

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.

Full-year adjusted earnings per share was $7.21, reflecting a 71.3% surge from the year-earlier $4.21. However, the metric lagged the Zacks Consensus Estimate by 7.2%.

The company’s GAAP earnings per share was $1.28 in the quarter compared with the year-ago EPS of $1.88, reflecting a 31.9% decline.

Revenues in Detail

Revenues grossed $1.32 billion in the reported quarter, down 2.3% year over year (down 2.9% at constant exchange rate or CER). However, the metric surpassed the Zacks Consensus Estimate by 29.1%.

Organic revenues (excluding buyouts of Acessa, Biotheranostics Diagenode and Mobidiag) of $1.27 billion decreased 5.4% year over year and 6% at CER.

U.S. revenues of $950.6 million declined 4.4%, whereas international revenues of $366 million improved 3.9% year over year or 1.6% at CER.

Organically, revenues in the United States declined 7.4% year over year to $912.6 million in the quarter. International revenues increased 0.3% year over year (down 2% at CER) to $353.2 million.

Full-year revenues were $5.63 billion, reflecting a 49.1% increase from the year-ago period. Organic revenue growth for the year was 50.2%. Revenues surpassed the Zacks Consensus Estimate by 5.4%.

Segments in Detail

Revenues at the Diagnostics segment declined 10.9% year over year (down 11.5% at CER) to $836.8 million in the quarter under review. Cytology & Perinatal revenues of $116 million rose 3.1% at CER. Molecular Diagnostics’ revenues of $704.5 million declined 14.5% at CER. Blood Screening revenues of $16.3 million rose 87.4% year over year at CER.

Revenues at the Breast Health segment improved 15.6% from the year-ago period (up 15.1% at CER) to $334.2 million. This primarily resulted from a robust product portfolio and strong demand for Brevera following its relaunch. Impressive performance by the segment’s Breast Imaging and Interventional Breast Solutions drove the top line.

Domestic sales in this segment improved in the quarter on a 17.7% revenue uptick, year over year. Further, outside the United States, Breast Health sales improved 5.6% at CER.

Revenues at the GYN Surgical business rose 21.8% year over year (up 20.9% at CER) to $122 million, while revenues at Skeletal Health increased 26.9% year over year (up 26.2% at CER) to $23.6 million.

Operational Update

In the fiscal fourth quarter, the company-provided adjusted gross margin contracted 480 basis points (bps) to 69.4%. According to the company, the decrease in gross margin was primarily due to a decline in COVID-19 assay sales compared to the prior-year period.

Adjusted operating expenses, as stated by the company, amounted to $353.2 million, up 27.7% year over year. The company reported adjusted operating margin contraction of 1120 bps to 42.5%.

Financial Update

Hologic ended fourth-quarter 2021 with cash and cash equivalents of $1.17 billion compared with $701 million at the end of 2020. Total long-term debt (including current portion) was $3.03 billion at the end of the fourth quarter of fiscal 2021 compared with $3.04 billion at the end of 2020.

Cumulative net cash provided by operating activities at the end of fourth-quarter fiscal 2021 was $2.33 billion compared with $896.6 million a year ago.

Guidance

Hologic has provided the financial guidance for the first quarter of fiscal 2022 and full-year 2022.

For first-quarter fiscal 2022, the company projects revenues within $1.10-$1.15 billion, implying a year-over-year decline in the range of 31.7-28.6% on a reported basis, 31.5-28.4% at CER and 33.5-30.4% organically. The Zacks Consensus Estimate for first-quarter fiscal 2022 revenues is pegged at $1.01 billion.

Adjusted earnings per share for the quarter is estimated within $1.15-$1.25, with a projected decline of 59.8-56.3% year over year. The Zacks Consensus Estimate for first-quarter fiscal 2022 earnings per share is pegged at 96 cents.

For fiscal 2022, the company projects revenues within $3.75-4.00 billion implying a year-over-year decline in the range of 33.4-29.0% on a reported basis, 33.0-28.5% at CER and 34.1-29.6% organically. The Zacks Consensus Estimate for first-quarter fiscal 2022 revenues is pegged at $3.91 billion.

Adjusted earnings per share for fiscal 2022 is estimated within $3.55-$3.85, with a projected decline of 57.8-54.2% year over year. The Zacks Consensus Estimate for first-quarter fiscal 2022 earnings per share is pegged at $3.69.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed an upward trend in fresh estimates. The consensus estimate has shifted 21.97% 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 quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Hologic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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