Hologic HOLX has been gaining from new strategic product launches across Diagnostics and Breast Health. However, macroeconomic issues and unfavorable FX headwind continue to impede growth. The stock carries a Zacks Rank #3 (Hold) currently.
Major Driving Factors Behind HOLX's Growth
Among Hologic’s advanced diagnostic products, one of the principal revenue-generating components is molecular diagnostic assays, which run on advanced instrumentation systems (Panther, Panther Fusion and Tigris). The molecular diagnostics segment has been a key driver for the division, contributing 11% (excluding COVID-19 sales) to revenues in the first quarter of fiscal 2025. The company’s BV CV/TV assay saw another strong quarter of double-digit growth, while the Biotheranostics lab testing business continues to be accretive to growth. Moreover, Hologic’s core women's health assays on the Panther platform delivered a robust performance in the quarter.
In Breast Health, the company’s latest advancements are generating significant interest. The new Envision Mammography Platform, the first FDA-approved mammography technology of its kind, offers an industry-leading 2.5-second scan time and is set to be launched commercially next year.
In the United States, Hologic will also introduce its next-generation Genius AI Detection PRO solution, building on the Genius AI Detection 2.0, offering even greater accuracy and efficiency in cancer screening and helping to reduce false positives. Furthermore, the company unveiled new research findings demonstrating that its Genius AI Detection 2.0 delivers consistent performance across diverse populations, addressing concerns about racial bias in AI-driven breast cancer diagnosis.
Hologic’s Surgical business has been driving strong broad-based performance by expanding access to technologies into new global markets. Its International Surgical business registered more than 20% growth in the fiscal first quarter of 2025 and instills more optimism for expansion with Gynesonics. In addition, the company is expanding the Panther Fusion system’s global reach to meet the need for high-throughput molecular diagnostic respiratory testing and is also laying the groundwork to build an additional menu on the platform. While international cytology and STI testing have more dominant U.S. revenues, they are expected to become meaningful revenue drivers in the international markets with time.
Hologic, Inc. Price
Hologic, Inc. price | Hologic, Inc. Quote
In order to streamline its operations and reduce the cost of revenues, Hologic has been adopting a few significant strategies over the past few years. The company has invested deliberately and opportunistically in commercial areas where it has recognized good returns. These include Hologic’s Genius marketing campaign in Breast Health and cervical cancer co-testing initiatives in Diagnostics. It has also made efforts to gain a competitive market share with NovaSure.
The stock has declined 13.2% in the past year against the industry’s 5.2% rise. With the company focusing on the expansion of diagnostics assay and breast health offerings in global markets, we expect the stock to regain its momentum in the near future.
Major Downsides for HOLX
Continued concerns about the systemic impact of potential long-term and widespread recession have heightened market volatility and lowered economic growth expectations. Global supply constraints have had an adverse effect on the company’s ability to meet customer demand while increasing manufacturing, transportation and warehousing costs for certain products. Further, the shifting geopolitical and macro environment, including policy changes under the new U.S. administration and a stronger U.S. dollar, have prompted the company to reassess its financial outlook for the year. With greater visibility into the 2025 market trends, Hologic reduced its full-year revenue guidance by $100 million to a range of $4.05 billion-$4.10 billion.
Moreover, uncertainties in the global economy and financial markets may cause medical equipment purchasers to decrease their medical health insurance premiums and procurement activities. Higher unemployment rates and health insurance premiums, co-payments and deductibles may result in cost-conscious consumers making fewer trips to their physicians and specialists, which will affect the demand for the company’s products and procedures.
On a divisional level, Hologic anticipates lower Breast Health capital equipment sales this year. The company acknowledged that its initial 2025 forecast was too aggressive due to an unclear view of the gantry market, particularly with the next-generation gantry still not ready for launch.
We also remain worried about the significant challenges Hologic faces owing to the impact of unfavorable foreign currency in the past few quarters. With the U.S. dollar strengthening significantly since early November, Hologic now anticipates a $20 million foreign currency headwind for fiscal 2025, a swing of more than $60 million from the initial expectations.
Key Picks
Some better-ranked stocks in the broader medical space are Boston Scientific BSX, Penumbra PEN and Phibro Animal Health PAHC. While Boston Scientific sports a Zacks Rank #1 (Strong Buy) at present, Penumbra and Phibro Animal Health carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for Boston Scientific’s 2025 earnings per share have jumped 2.9% to $2.85 in the past 30 days. Shares of the company have rallied 60.4% in the past year compared with the industry’s growth of 15.9%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%. In the last reported quarter, it delivered an earnings surprise of 7.69%.
Penumbra shares have dipped 0.5% in the past year. Estimates for the company’s 2024 earnings per share have remained constant at $2.81 in the past 30 days. PEN’s earnings beat estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 10.54%. In the last reported quarter, it posted an earnings surprise of 23.19%.
Estimates for Phibro Animal Health’s fiscal 2025 earnings per share have increased 5.6% to $1.71 in the past 30 days. Shares of the company have surged 105.9% in the past year compared with the industry’s 15.9% rise. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 27.06%. In the last reported quarter, it delivered an earnings surprise of 28.57%.
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