Leading player in the women’s health market Hologic Inc. (HOLX) recently gained the U.S. Food and Drug Administration (FDA) clearance for its Single Energy (SE) Femur Exam on a dual energy x-ray absorptiometry (DXA) platform. This will be used for the characteristic examination of potential atypical femur fractures (AFF).
The company’s SE Femur Exam will be offered on the soon to be commercialized product line of bone densitometers – Horizon DXA platform. The use of this new assessment option should improve clinical outcomes for potential AFF patients with quick and convenient diagnosis.
With the approval of SE Femur Exam, Hologic will serve a widely untapped market as AFF has been reported rarely in patients. However, the fracture is reported to cause extreme distress in affected patients. According to a study published in the ANZ Journal of Surgery, patients with AFF are prone to complications followed by deteriorated health and function after the fracture. These patients also brace lengthy in-patient hospitalization.
Our Take
The commercialization of the SE Femur Exam should strengthen Hologic’s Skeletal Health franchise. Despite a strong portfolio, the business contributed 4% to revenues in the second quarter of fiscal 2013. We believe that lucrative product approvals should bolster revenues from the Skeletal Health segment.
Over the past few quarters, Hologic witnessed several challenges in the form of economic uncertainties in Europe, slower sales cycles and increasing pricing pressure. Although portfolio diversification might help to alleviate sluggish sales in the future, weak quarterly performance and lower revision of fiscal year guidance is a cause of concern. Estimate revision trend for the ongoing and next fiscal also reflects bearish sentiments.
The stock currently carries a Zacks Rank #4 (Sell). While we prefer to avoid Hologic, other stocks like Mindray Medical International Limited (MR), Teleflex Incorporated (TFX) and IDEXX Laboratories, Inc. (IDXX) are worth considering. Mindray Medical carries a Zacks Rank #1 (Strong Buy) whereas the other two carry a Zacks Rank #2 (Buy).
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