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Hologic Stock Rides on Impressive Preliminary Q1 Result

Zacks Equity Research

Hologic Inc. HOLX recently announced preliminary revenue results for first-quarter fiscal 2019. The company is slated to release its comprehensive financial results for the period on Jan 30.

Hologic projects an impressive performance in the fiscal first quarter and expects to surpass its own expectations on the revenue front. Following this announcement, shares increased 3.4% to reach $40.49 at yesterday’s close.

In the to-be-reported quarter, Hologic expects total revenues to increase approximately 5% (up 5.7% at constant exchange rate or CER) on a year-over-year basis to $831 million, well ahead of the current Zacks Consensus Estimate of $811 million. This also exceeds the company's earlier provided revenue guidance of $800-$815 million. The solid top line is primarily expected on the back of balanced growth across a majority of Hologic’s segments.

While Diagnostics (35.7% of total revenues) is likely to rise 4.2% at CER, Breast Health (39.1%) is estimated to grow 12.8% on a year-over-year basis. GYN Surgical (12.9%) revenues might remain unchanged on a year-over-year basis. Skeletal Health (2.5%) is anticipated to improve 5% year over year. However, Medical Aesthetics is projected to decline 12.1% in the quarter to be reported.

While reporting financial results for the fourth quarter of fiscal 2018, Hologic had provided its business outlook for the first quarter and fiscal 2019. The company predicted adjusted revenues of $3.29-$3.33 billion (expected growth rate of 2.8-4.2% at CER) for the full year. The Zacks Consensus Estimate for revenues is pegged at $3.32 billion, within but near the upper end of the guided range.

The company also envisions adjusted EPS of $2.38-$2.42 (at 6.7-8.5% growth rate). The consensus mark for the metric stands at $2.41, falling within the estimated range.

For first-quarter fiscal 2019, adjusted EPS is assumed at 55-57 cents, reflecting annualized growth of 0-3.6%. The Zacks Consensus Estimate for the same in the first quarter is pegged at 59 cents, higher than the company’s forecast.

Share Price Movement

Hologic has consistently outperformed its industry over the past three months. The stock has slipped 0.4% compared with 12.7% decline of the industry.

Zacks Rank & Key Picks

Hologic currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Veeva Systems VEEV, Surmodics, Inc. SRDX and athenahealth, Inc.  ATHN.

Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here .

Surmodics’ long-term earnings growth rate is predicted at 10%. The stock carries a Zacks Rank #2 (Buy).

athenahealth’s long-term earnings growth rate is projected at 17.7%. The stock has a Zacks Rank of 2.

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