On Tuesday, JPMorgan adjusted its financial outlook on Hologic (NASDAQ:HOLX), increasing the price target to $95 from $91 while sustaining a Neutral rating on the stock.
The revision follows Hologic's third fiscal quarter report, which exceeded expectations with revenues of $1.011 billion, surpassing both the analyst's projection of $1.001 billion and the company's own guidance range of $992.5 million to $1.008 billion. This revenue reflects a 3.8% organic constant currency growth compared to the anticipated 2.7%.
Hologic's adjusted operating profit margin (OPM) of 31.2% was slightly higher than the forecasted 31.1%, and its adjusted earnings per share (EPS) of $1.06 outperformed the expected $1.02 and the guided range of $0.98 to $1.05. The company's performance was driven by a notable 10.5% constant currency growth in Molecular Diagnostics, a 7.1% growth in Breast Health due to imaging recovery, and a 6.2% rise in GYN Surgical.
However, Hologic has revised its full-year 2024 revenue guidance, accounting for a $20 million impact from a temporary shipping halt in its non-core Skeletal business, which should be resolved by the first fiscal quarter of 2025, and a $4-5 million revenue boost from its recent acquisition of Endomagnetics.
Consequently, the updated guidance anticipates a slight constant currency revenue decline between 0.5% and 0.1%, versus the previous forecast of a 0.2% increase and the earlier guidance of a 0.8% decrease to a 0.4% increase. Organic growth excluding COVID is expected to be between 5.2% and 6.5%.
For the bottom line, Hologic now expects its adjusted EPS for fiscal year 2024 to be between $4.04 and $4.11, benefiting from favorable adjustments to other income and now projecting total other expenses of -$8 million for the year, compared to the previous estimate of -$30 to -$40 million. This updated EPS guidance is slightly above the analyst consensus of $4.07 and falls within the previously guided range of $4.02 to $4.12.
JPMorgan reaffirmed its confidence in Hologic's ability to meet its long-term financial goals, which include top-line growth of 5-7% excluding COVID impacts and high single-digit to low double-digit adjusted EPS growth. The firm's valuation is based on a discounted cash flow analysis projecting through December 2025. Additionally, JPMorgan announced it will host Hologic's CEO Steve MacMillan for a CEO Call series on August 19, with registration details to be provided later.
In other recent news, Hologic repurchased $100 million in shares during this period.
These recent developments come despite challenges such as the administrative recall of BioZorb and elevated chip costs. Nevertheless, the acquisition of Endomagnetics aligns with Hologic's breast health franchise growth strategy, and the company ended the quarter generating over $400 million from operating activities, with $2.4 billion in cash.
InvestingPro Insights
As Hologic (NASDAQ:HOLX) navigates through its fiscal year with notable developments and strategic acquisitions, real-time data from InvestingPro provides a deeper understanding of the company's financial health and stock performance. Hologic's management has demonstrated confidence in the company's value through an aggressive share buyback program, aligning with an InvestingPro Tip that highlights high shareholder yield. In addition, analysts project an increase in net income for the year, which is a positive signal for investors considering the company's future profitability.
InvestingPro Data reflects Hologic's current market capitalization at $19.03 billion USD, with a Price/Earnings (P/E) ratio of 27.62. The company's stock is trading at a high earnings multiple, which is an important consideration for investors looking at the value of their investment relative to the company's earnings. Furthermore, the stock has been experiencing low price volatility, suggesting a stable investment for those concerned with market fluctuations.
For investors seeking additional insights and guidance, there are more InvestingPro Tips available, including an analysis of the company's debt levels and liquidity. With these tips, investors can make more informed decisions about their Hologic investments. To access these insights and take advantage of a special offer, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription. The total number of additional tips listed on InvestingPro for Hologic is 12, offering a comprehensive look at various aspects of the company's financial performance and stock behavior.
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