It has been about a month since the last earnings report for Hologic (HOLX Quick QuoteHOLX - Free Report) . Shares have added about 6.7% 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 Q2 Earnings Surpass Estimates, 2022 View Up

Hologic reported second-quarter fiscal 2022 adjusted earnings per share of $2.07, down 20.1% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 33.6%.

The adjustments include charges and benefits related to the 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 $1.80 in the quarter compared with the year-ago EPS of $2.38, reflecting a 24.4% decline.

Revenues in Detail

Revenues grossed $1.44 billion in the reported quarter, down 6.6% year over year (down 5.2% at constant exchange rate or CER). However, the metric surpassed the Zacks Consensus Estimate by 12.6%.

Excluding revenues from COVID-19, organic revenues declined 1.6% at CER.

U.S. revenues of $992.4 million declined 6.7%, whereas international revenues of $443.3 million dropped 6.4% year over year or 1.8% at CER.

Organically, revenues in the United States declined 8% year over year to $963.2 million in the quarter. International revenues decreased 8.6% year over year (down 3.9% at CER) to $430.6 million.

Segments in Detail

Revenues at the Diagnostics segment declined 7.3% year over year (down 5.6% at CER) to $987.1 million in the quarter under review. Cytology & Perinatal revenues of $115.4 million fell 0.1% at CER. Molecular Diagnostics’ revenues of $862.5 million declined 6.1% at CER. Blood Screening revenues of $9.2 million fell 23.3% year over year at CER.

Revenues in the Breast Health segment fell 7.7% from the year-ago period (down 6.8% at CER) to $310.4 million. This primarily resulted from the semiconductor chip shortage.

Domestic sales in this segment fell 5.3% year over year. Further, outside the United States, Breast Health sales declined 11.2% at CER.

Revenues at the GYN Surgical business rose 2.7% year over year (up 3.5% at CER) to $117.3 million, while revenues at Skeletal Health declined 7.5% year over year (down 6.2% at CER) to $20.9 million.

Operational Update

In the fiscal second quarter, the company-provided adjusted gross margin contracted 400 basis points (bps) to 71%. 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 $338.2 million, up 21.8% year over year. The company reported adjusted operating margin contraction of 950 bps to 47.4%.

Financial Update

Hologic ended the second quarter of fiscal 2022 with cash and cash equivalents of $2.29 billion compared with $1.42 billion at the end of the first quarter of 2021. Total long-term debt (including current portion) was $3.07 billion at the end of the second quarter of fiscal 2022 compared with $3.07 billion at the end of the first quarter of 2022.

Net cash provided by operating activities at the end of second-quarter fiscal 2022 was $1.63 billion compared with $1.20 billion a year ago.

Guidance

Hologic has issued the guidance for the third quarter of fiscal 2022.

For third-quarter fiscal 2022, the company projects revenues within $875-$915 million, implying a year-over-year decline in the range of 25.1-21.7% on a reported basis, 23.4-19.9% at CER and 23.6-20.1% organically. The Zacks Consensus Estimate for second-quarter fiscal 2022 revenues is pegged at $884.8 million.

Adjusted earnings per share for the quarter is estimated within 67-72 cents, with a projected decline of 49.6-45.9% year over year. The Zacks Consensus Estimate for first-quarter fiscal 2022 earnings per share is pegged at 72 cents.

Hologic has raised the financial guidance for full-year 2022.

For fiscal 2022, the company now projects revenues within $4.60-4.70 billion, implying a year-over-year decline in the range of 18.3-16.6% on a reported basis, 17.2-15.4% at CER and 18.3-16.5% organically (previous guided range was $4.40-4.55 billion). The Zacks Consensus Estimate for fiscal 2022 revenues is pegged at $4.39 billion.

Adjusted earnings per share for fiscal 2022 is estimated within $5.45-$5.65, with a projected decline of 35.2-32.8% year over year (previous guided range was $4.90-5.20). The Zacks Consensus Estimate for fiscal 2022 earnings per share is pegged at $5.10.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in estimates review.

VGM Scores

At this time, Hologic has a great Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, 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 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. Notably, Hologic has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.