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Here's Why You Should Add Hologic Stock in Your Portfolio

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Hologic, Inc. HOLX has been gaining from robust segmental growth. Increased earnings guidance for the second quarter and fiscal 2020, and regulatory clearances buoy optimism.

Over the past year, shares of the Zacks Rank #2 (Buy) company have outperformed its industry. The company has gained 2.9% compared to the 0.6% rise of its industry.

The renowned provider of medical imaging systems and surgical products, catering to women’s healthcare needs, has a market capitalization of $12.85 billion. The company projects 8.4% growth for the second quarter of fiscal 2020 and expects to maintain its strong segmental performance. Further, it delivered a positive earnings surprise of 1.3%, on average, over the trailing four quarters.

 


 

Let’s delve deeper.

Q1 Results: Hologic exited the first quarter of fiscal 2020 on a solid note. Strong top-line growth was led by a solid year-over-year rise in core businesses like GYN Surgical and Molecular Diagnostics. We are upbeat about the recent regulatory clearances for the Unifi Workspace reading solution and 3DQuorum artificial intelligence imaging technology in Breast Health, and the Definity cervical dilator in GYN Surgical. Also, the acquisition of a controlling interest in SSI started to contribute to Hologic’s top line.

Product Portfolio: We are optimistic about the latest product offerings within the Panther Scalable Solutions (PSS) portfolio, which are now commercially available in the United States and Europe. Within the PSS portfolio, the Panther system functions as the foundation for optional add-ons. These add-ons include Panther Fusion (launched in 2016) that provides additional IVD menu and the Open Access functionality, the now available Panther Plus and Panther Link, and the upcoming Panther Trax.

Potential in GYN Surgical: We are upbeat about the impressive revenue growth of the GYN Surgical business in the fiscal first quarter. Myosure and NovaSure continued to be the driving force for the segment. Several newly-launched products have started contributing effectively to the company’s Surgical business. The most notable among these are the Fluent Fluid Management System and Omni 3-in-1 Hysteroscope. The company also recently launched Omni Lok cervical seal and Definity cervical dilator within the segment.

However, despite the upsides, Hologic’s stock price may witness a downturn due to foreign exchange fluctuations. The company also faces tough competition from biggies like Abbott Laboratories. Moreover, the FDA re-classified FFDM devices to class II from class III, thereby making it easier for all medical device companies to bring in similar products in the market. A continuous rise in costs and expenses are also creating pressure on Hologic’s margins.

Estimate Trend

The company is witnessing a positive estimate revision trend for 2020. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved 0.8% north to $2.65.

Other Key Picks

Some other top-ranked stocks from the broader medical space are ResMed Inc. RMD, Medtronic plc MDT and Hill-Rom Holdings, Inc. HRC.

ResMed has a projected long-term earnings growth rate of 14.5%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Medtronic’s long-term earnings growth rate is estimated at 7.4%. The company presently carries a Zacks Rank #2.

Hill-Rom’s long-term earnings growth rate is estimated at 11.1%. It currently carries a Zacks Rank #2.

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