Mizuho Securities has adjusted its outlook for Hologic, Inc. (NASDAQ: NASDAQ:HOLX), a company specializing in medical diagnostics and devices.
The firm increased its price target on Hologic shares to $90.00 from the previous target of $85.00. Alongside the price target change, Mizuho maintained its Outperform rating for the stock.
The revision in the price target reflects a reassessment of Hologic's near and medium-term prospects. Mizuho took into account several factors, including the anticipated cycle for Breast Health 3D mammography gantries, evolving COVID-19 testing trends, and ongoing supply chain challenges within Hologic's non-core Skeletal Health segment.
Despite some mixed short-term signals, Mizuho anticipates that Hologic's financial performance will normalize following the adverse comparisons due to COVID-19. The firm expects Hologic's revenue growth to align with the higher end of the 5-7% long-range plan (LRP) target.
The optimism is supported by potential tailwinds from the new cycle of 3D mammography products, continued strength in the Molecular segment, and the successful integration of acquired assets into Hologic's organic portfolio.
Mizuho's analyst highlighted the company's solid position in its core Breast Health and Diagnostics divisions. The absence of exposure to GLP-1 treatments, a class of drugs used in diabetes and other conditions, was also noted as a positive factor in maintaining the Outperform rating on Hologic's stock.
In other recent news, Hologic has been subject to several analyst updates. Citi downgraded Hologic's stock from Buy to Neutral due to concerns over potentially overestimated growth for fiscal year 2025.
The revised outlook suggests a modest growth projection of 4-5% and an earnings per share (EPS) closer to $4.30. This contrasts with the previous consensus of approximately 5.4% growth and an EPS of $4.41.
Meanwhile, Needham maintained its Buy rating on Hologic, despite acknowledging an expected slowdown in the company's Breast Health and COVID-19 testing sales. In contrast, JPMorgan raised its price target for Hologic, while maintaining a Neutral stance. The financial firm expressed confidence in Hologic's ability to meet its long-term financial goals, projecting a top-line growth of 5-7% excluding COVID impacts.
Furthermore, Hologic recently reported strong financial results for the third quarter of fiscal 2024, surpassing its guidance with total revenue of $1.01 billion and non-GAAP earnings per share of $1.06. These figures indicate a 14% year-over-year growth, largely driven by the company's molecular diagnostics and breast health segments.
InvestingPro Insights
Hologic's financial metrics and market performance align well with Mizuho's optimistic outlook. According to InvestingPro data, Hologic boasts a market capitalization of $18.4 billion and trades at a P/E ratio of 27.04. The company's revenue for the last twelve months as of Q3 2024 stands at $3.99 billion, with a robust gross profit margin of 60.58%.
InvestingPro Tips highlight Hologic's financial strength and growth potential. The company is expected to grow its net income this year, and it's trading at a low P/E ratio relative to near-term earnings growth, supporting Mizuho's positive stance. Additionally, Hologic operates with a moderate level of debt and has liquid assets exceeding short-term obligations, indicating financial stability.
It's worth noting that Hologic's stock is trading near its 52-week high, reflecting investor confidence in line with Mizuho's increased price target. For investors seeking more comprehensive analysis, InvestingPro offers 11 additional tips on Hologic, providing a deeper understanding of the company's financial health and market position.
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