Hologic Inc.
HOLX
announced lackluster preliminary revenues for first-quarter fiscal 2022 (ended Dec 25, 2021) on Jan 9. The company estimates a year-over-year decline in total revenues. However ex-covid revenue growth was satisfactory, indicating a strong base business rebound. The preliminary total revenues exceeded the Zacks Consensus Estimate as well as the company’s estimates. The stock rose 4.5% the following day to close at $73.45.
The company is slated to release its full financial results for the period on Feb 2.
Prelim Q1 at a Glance
Per the preliminary announcement, total revenues for the fiscal first quarter are expected to be approximately $1,471.1 million, implying a projected 8.6% decline year over year (down 8.2% at constant exchange rate or CER). However, this preliminary figure exceeds the Zacks Consensus Estimate of $1.12 billion by a wide margin. The preliminary expectation also remains ahead of the company’s guidance range of $1,100 to $1,150 million, provided on Nov 1, 2021.
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Hologic’s Diagnostics division’s preliminary numbers show a strong rebound in base business while meeting heavy demand for COVID testing. The Breast and Skeletal Health and Surgical businesses also showed strength, with each growing over 8% as per the prelim announcements. Overall, the company projects organic growth excluding COVID benefits to be 9.0% at CER in the fiscal first quarter compared with its 5% to 7% long-term growth target.
Segmental Details
On a segmental basis, while
Diagnostics
revenues are likely to fall 15.2% at CER, Organic Diagnostics revenues, excluding COVID, are likely to rise 10% at CER.
GYN Surgical
(7.7%) is estimated to grow 8.2% at CER on a year-over-year basis.
Breast Health
(20.7%) revenues are likely to rise 8.4% at CER.
Skeletal Health
(1.5%) is anticipated to rise 9.7% at CER.
Preliminary organic revenues, excluding COVID, are expected at $840.9 million, implying 9% year-over-year growth at CER.
EPS Projection
The company expects fiscal first-quarter adjusted earnings per share (EPS) to be $1.15-$1.25, with a projected decline of 59.8-56.3% year over year. The current Zacks Consensus Estimate is pegged at $1.17.
Q1 Update
In Diagnostics, in October, the company’s Aptima SARS-CoV-2/Flu Assay was made available for the simultaneous detection and differentiation of three respiratory viruses that can present overlapping clinical symptoms. The three viruses – SARS-CoV-2, influenza A and influenza B – typically cause similar symptoms including fever, cough, headache and fatigue. With the potential for seasonal flu in addition to the ongoing COVID-19 pandemic, physicians are expected to test patients presenting with these shared symptoms for all three viruses. This while opening up the scope for testing is likely to have contributed significantly to the quarter’s diagnostic testing revenues.
Share Price Movement
Hologic has outperformed its
industry
over the past six months. The stock has gained 5.3% against a 2.5% decline of its industry.
Zacks Rank & Other Stocks to Consider
Currently, Hologic carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that investors can consider are
AMN Healthcare Services, Inc.
AMN
,
Apollo Endosurgery, Inc.
APEN
and
Patterson Companies, Inc.
PDCO
.
AMN Healthcare, carrying a Zacks Rank #1 (Strong Buy), has a long-term earnings growth rate of 16.2%. The company’s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 19.5%, on average.
AMN Healthcare has outperformed its industry over the past year. AMN has gained 48.3% against the 57.3% industry decline.
Apollo Endosurgery, carrying a Zacks Rank #2 (Buy), has a long-term earnings growth rate of 7%. The company‘s earnings surpassed estimates in the trailing four quarters, delivering a surprise of 25.6%, on average. You can see
the complete list of today’s Zacks #1 Rank stocks here.
Apollo Endosurgery has outperformed its industry in the past year. APEN has gained 103.3% versus the industry’s 1% fall.
Patterson Companies, sporting a Zacks Rank #2, has a long-term earnings growth rate of 9.9%. The company surpassed earnings estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 3.7%.
Patterson Companies has underperformed its industry over the past year. PDCO has declined 11.1% versus the industry’s 4.9% rise.
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