On Jan 19, Zacks Investment Research upgraded Hologic Inc. (HOLX) to a Zacks Rank #2 (Buy).
Why the Upgrade?
The company reported better-than-expected fourth-quarter fiscal 2014 results with adjusted earnings per share (EPS) and revenues exceeding the respective Zacks Consensus Estimate. Notably, this marks the company’s first quarter wherein Hologic delivered positive growth in all its 4 business franchises.
Adjusted EPS of 43 cents were up 10.3% year over year, ahead of the Zacks Consensus Estimate by 16.2%. Revenues of $660.6 million rose 6.2% and topped the Zacks Consensus Estimate of $636 million. The top line also steered past the company’s guidance.
Going ahead, Hologic projects impressive performance in first-quarter fiscal 2015 which is expected to surpass expectations on the revenue front. Earlier, while reporting the fiscal fourth quarter results, Hologic had provided its business outlook for adjusted EPS for the first quarter. Adjusted EPS is expected in the band of $0.35–$0.36 (year-over-year growth of approximately 3% to 6%). The current Zacks Consensus Estimate for EPS is pegged at $0.36.
For fiscal 2015, the company expects revenue growth (excluding the impact of foreign currency) of approximately 2% to 3.5% over fiscal 2014. Including an expected 1% negative impact from foreign currency, Hologic expects reported growth of approximately 1% to 2.5%, resulting in reported revenues in the range of $2.54 billion to $2.57 billion. The current Zacks Consensus Estimate for revenues for fiscal 2015 is pegged at $2.56 billion, which lies within the guidance range.
For fiscal 2015, Hologic expects adjusted EPS in the range of $1.50 to $1.54, reflecting year-over-year growth of 3%–5.5%. The current Zacks Consensus Estimate for adjusted EPS is pegged at $1.52, which lies within the guidance.
Management believes that a majority of Hologic’s growth opportunities lies in the largely under penetrated foreign market. The company is currently actively involved in organizing its global infrastructure to utilize those benefits. The strategy lies in accelerating the performance of the major growth drivers of the company, viz. Diagnostics, Breast Health and Surgical, and establishing a strong foothold globally.
Moreover, the company’s international business witnessed positive growth in the fourth quarter on the back of the improvement observed in the blood screening franchise owing to the Japanese Red Cross deal. Offering a wide range of products, Hologic is arguably an industry leader in the field of women’s health. Going forward, we are optimistic about the increasing uptake of the company’s technically advanced solutions. Moreover, with the acquisition of Gen-Probe, the company is now a prominent player in the molecular diagnostics segment. Additionally, the recently released reimbursement rates for 3D mammography screening and diagnostic services is expected to boost demand for the 3D test which in turn will usher in profits at the company.
Key Picks from the Sector
Medical instrument stocks such as ABIOMED, Inc. (ABMD), Cyberonics Inc. (CYBX) and Edwards Lifesciences Corp. (EW) are also expected to do well. All three hold the same Zacks Rank as Hologic.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
To read this article on Zacks.com click here.
Get all Zacks Research Reports and be alerted to fast-breaking buy and sell opportunities every trading day.
Be the first to comment