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Here's Why You Should Retain Hologic (HOLX) Stock For Now
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Hologic, Inc. (HOLX - Free Report) is well-poised for growth in the coming quarters, courtesy of its continued strength in the Breast Health arm. The optimism led by a solid fourth-quarter fiscal 2022 performance and its growth initiatives are expected to contribute further. However, stiff competition and revenues impacted by COVID-19-related uncertainties are a headwind.
In the past year, the Zacks Rank #3 (Hold) stock has lost 1.4% compared with 24.4% decline of the industry and 16.1% fall of the S&P 500.
The renowned provider of medical imaging systems and surgical products, catering to women’s healthcare needs, has a market capitalization of $18.47 billion. The company projects 15.2% growth for the next five years and expects to maintain its strong performance. The company surpassed estimates in all the trailing four quarters, the average surprise being 46.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strength in Breast Health: Hologic has been making impressive progress in its Breast Health arm over the past few months, raising our optimism. The company is currently focusing on expanding its strategy to diversify business across the patient continuum of care. It has also launched new software products based on its artificial intelligence investments and has strengthened its interventional franchise via the Brevera relaunch.
In November, Hologic’s 3Dimensions mammography system was awarded EUREF Type Test certification by the European Reference Organisation for Quality Assured Breast Screening and Diagnostic Services.
Growth Initiatives: We are optimistic about Hologic’s adoption of a few significant strategies over the past few years to streamline its operations and reduce the cost of revenues. The company has invested deliberately and opportunistically in commercial areas where management has recognized a good return. Hologic has launched a cadence of products, including 3DQuorum Imaging Technology, powered by Genius AI in the United States and LOCalizer radiofrequency identification tag for long-term placement in Europe.
Strong Q4 Results: We are upbeat about Hologic’s better-than-expected results in fourth-quarter fiscal 2022. The company saw a robust uptick in organic revenues in its GYN Surgical business as the company registered procedural volumes return as well as acceleration from the new business lines. Excluding COVID-19 revenues, Diagnostics revenues also improved on a reported basis and at a constant exchange rate.
Downsides
COVID-19 Revenue Uncertainty: Hologic is one of the key players working to produce or have produced tests for COVID-19. This may lead to customer diversion, including governmental and quasi-governmental entities, away from Hologic and toward other companies. Hologic is also witnessing a decline in its COVID-19 testing revenues following the vaccine rollout. This might significantly pull down its revenues.
Stiff Competition: Hologic operates in a highly-competitive industry, where its mammography, related products and subsystems compete worldwide with products offered by several competitors. In the United States, few other key players have received the FDA’s approval for their products, which has put additional competitive pressure on Hologic.
Estimate Trend
Hologic has been witnessing a negative estimate revision trend for fiscal 2023. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 0.9% south to $3.46.
The Zacks Consensus Estimate for first-quarter fiscal 2023 revenues is pegged at $962.2 million, suggesting a 34.6% decline from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , ShockWave Medical, Inc. (SWAV - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
AMN Healthcare has gained 7% against the industry’s 28.4% decline in the past year.
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 21.2% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.
ShockWave Medical has gained 28.3% against the industry’s 23.1% decline over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.
McKesson has gained 70.3% against the industry’s 7.8% decline over the past year.
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Here's Why You Should Retain Hologic (HOLX) Stock For Now
Hologic, Inc. (HOLX - Free Report) is well-poised for growth in the coming quarters, courtesy of its continued strength in the Breast Health arm. The optimism led by a solid fourth-quarter fiscal 2022 performance and its growth initiatives are expected to contribute further. However, stiff competition and revenues impacted by COVID-19-related uncertainties are a headwind.
In the past year, the Zacks Rank #3 (Hold) stock has lost 1.4% compared with 24.4% decline of the industry and 16.1% fall of the S&P 500.
The renowned provider of medical imaging systems and surgical products, catering to women’s healthcare needs, has a market capitalization of $18.47 billion. The company projects 15.2% growth for the next five years and expects to maintain its strong performance. The company surpassed estimates in all the trailing four quarters, the average surprise being 46.1%.
Image Source: Zacks Investment Research
Let’s delve deeper.
Strength in Breast Health: Hologic has been making impressive progress in its Breast Health arm over the past few months, raising our optimism. The company is currently focusing on expanding its strategy to diversify business across the patient continuum of care. It has also launched new software products based on its artificial intelligence investments and has strengthened its interventional franchise via the Brevera relaunch.
In November, Hologic’s 3Dimensions mammography system was awarded EUREF Type Test certification by the European Reference Organisation for Quality Assured Breast Screening and Diagnostic Services.
Growth Initiatives: We are optimistic about Hologic’s adoption of a few significant strategies over the past few years to streamline its operations and reduce the cost of revenues. The company has invested deliberately and opportunistically in commercial areas where management has recognized a good return. Hologic has launched a cadence of products, including 3DQuorum Imaging Technology, powered by Genius AI in the United States and LOCalizer radiofrequency identification tag for long-term placement in Europe.
Strong Q4 Results: We are upbeat about Hologic’s better-than-expected results in fourth-quarter fiscal 2022. The company saw a robust uptick in organic revenues in its GYN Surgical business as the company registered procedural volumes return as well as acceleration from the new business lines. Excluding COVID-19 revenues, Diagnostics revenues also improved on a reported basis and at a constant exchange rate.
Downsides
COVID-19 Revenue Uncertainty: Hologic is one of the key players working to produce or have produced tests for COVID-19. This may lead to customer diversion, including governmental and quasi-governmental entities, away from Hologic and toward other companies. Hologic is also witnessing a decline in its COVID-19 testing revenues following the vaccine rollout. This might significantly pull down its revenues.
Stiff Competition: Hologic operates in a highly-competitive industry, where its mammography, related products and subsystems compete worldwide with products offered by several competitors. In the United States, few other key players have received the FDA’s approval for their products, which has put additional competitive pressure on Hologic.
Estimate Trend
Hologic has been witnessing a negative estimate revision trend for fiscal 2023. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 0.9% south to $3.46.
The Zacks Consensus Estimate for first-quarter fiscal 2023 revenues is pegged at $962.2 million, suggesting a 34.6% decline from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , ShockWave Medical, Inc. (SWAV - Free Report) and McKesson Corporation (MCK - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has gained 7% against the industry’s 28.4% decline in the past year.
ShockWave Medical, carrying a Zacks Rank #2 at present, has an estimated growth rate of 21.2% for 2023. SWAV’s earnings surpassed estimates in all the trailing four quarters, the average beat being 146.1%.
ShockWave Medical has gained 28.3% against the industry’s 23.1% decline over the past year.
McKesson, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.1%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 4.8%.
McKesson has gained 70.3% against the industry’s 7.8% decline over the past year.