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Should You Buy, Sell or Hold Hologic Stock Post Q3 Earnings?
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Key Takeaways
{\"0\":\"HOLX beat Q3 estimates with $1.02B revenues and $1.08 EPS, driven by strong Diagnostics and Surgical sales.\",\"1\":\"Hologic lifted FY25 forecast on solid Q3 growth and successful tariff mitigation efforts.\",\"2\":\"With new leadership and AI innovation, Hologic is reviving momentum in Breast Health operations.\"}
On July 30, Hologic (HOLX - Free Report) released its third-quarter fiscal 2025 results after the bell. The U.S. medical equipment manufacturer that specializes in women’s health delivered a performance that surpassed its expectations. Management is now aiming for a return to better top and bottom-line growth in the fourth quarter, thanks to a continued rebound in the Breast Health business and solid performances from the rest of the divisions. The balance sheet remains strong, giving the company ample flexibility both financially and strategically. Since the results, shares of Hologic have risen 4.4%.
The stock has declined 5.9% year to date, lower than the industry’s 8.8% fall. In comparison, peers GE Healthcare (GEHC - Free Report) and Becton, Dickinson and Company (BDX - Free Report) have seen steeper declines.
Hologic’s YTD Performance
Image Source: Zacks Investment Research
Hologic’s Q3: A Quick Recap
The company posted revenues of $1.02 billion and adjusted earnings per share (EPS) of $1.08, both surpassing the respective Zacks Consensus Estimate. The Molecular Diagnostics business led the way, with U.S. sales climbing 7.3% on strong demand for the BV, CV/TV test and the Panther Fusion assays. As anticipated, Cytology and Perinatal revenues declined 2.2% year over year amid the ongoing softness in China.
Meanwhile, overall Diagnostics marked modest 0.9% growth. Hologic’s Breast Health revenues dipped 5.8%, facing its toughest year-over-year comparison. However, revenues of $365.2 million improved from the second quarter and edged past internal expectations. Interventional sales rose 31.8% in the third quarter, led by Endomagnetics. Excluding that, organic interventional sales still grew 6%.
Growth in GYN Surgical was fueled by a 24.8% increase in the International unit, mainly because of stronger adoption in markets with newly established reimbursements and entry into new regions. Skeletal Health revenues surged 62.1% as Hologic resumed shipments for the final DXA model and worked through the pent-up demand from the earlier shipping hold.
Further, the gross margin (non-GAAP) came in at 60.3%, down 80 basis points (bps). The operating margin declined 110 basis points to 30.1%, but it remained among the best in the industry. Hologic generated $343 million in operating cash flow, and ended the quarter with cash and short-term investments of $1.88 billion and an adjusted net leverage ratio of 0.6.
Hologic Updates Its 2025 Forecast
Citing a strong third-quarter performance and lower tariff headwinds, the company has raised the midpoints of its 2025 guidance ranges for both top and bottom lines. Revenues are now projected in the range of $4.08-$4.09 billion and non-GAAP EPS of $4.23 to $4.26. The outlook for the divisions also remains largely unchanged, with Diagnostics expected to grow in the mid-single digits, a low-single-digit decline in Breast Health, and Surgical to expand in high-single digits. On the margin front, Hologic still expects gross and operating margins to land in the low 60s and low 30s, respectively.
The Zacks Consensus Estimate for Hologic’s fiscal 2025 earnings has also edged up 0.7% over the past week. The consensus mark for both fiscal 2025 and 2026 top and bottom lines indicates year-over-year growth.
Image Source: Zacks Investment Research
Two Factors Shaping Hologic
Breast Health Rebound Underway: Hologic remains optimistic about Breast Health, now led by a new commercial leadership team. The team has refined the end-of-life strategy for older gantries, which is set to have a stronger impact in the coming quarters. In terms of product innovation, the company is preparing to launch the Genius AI Detection PRO solution, which expands on Genius AI Detection 2.0 by providing even greater accuracy and efficiency for radiologists. It will be sold as an upgrade on the 3D system and the next-generation Envision platform upon its launch in 2026. Also, Endomagnetics, now transitioned to an organic part of the business, has enhanced Hologic’s Interventional Breast Surgery portfolio.
Diagnostics Remains a Bright Spot: The company continues to make progress in addressing the wide U.S. vaginitis testing gap with the BV, CV/TV assay — now its second-largest assay globally. Biotheranostics is seeing strong adoption of its breast cancer index test, which helps guide decisions around extended endocrine therapy. Hologic plans to diversify its menu in Panther Fusion sidecar over the next several years by launching an IVD test for GI and hospital-acquired infections. Meanwhile, the Genius digital diagnostics system in Cytology offers workflow advantages that help customers manage growing labor shortages while enabling cervical cancer screening in regions with limited infrastructure.
What Valuation Metric Says About HOLX
HOLX shares are trading at a forward five-year price-to-sales (P/S) of 3.55X, which is discounted than the 4.10X industry average.
Hologic’s 5-year P/S vs. Industry
Image Source: Zacks Investment Research
However, it is still expensive than BD and GEHC, which have sales multiples of 2.26 and 1.55, respectively.
Concerns for HOLX
Hologic faces ongoing macroeconomic volatility, including the implementation of a 10% baseline tariff on all U.S. imports. The company previously estimated a quarterly gross tariff impact of $20-$25 million, with about two-thirds of the amount linked to Costa Rica, where it manufactures most of its surgical and interventional breast health products. Shipments of products to and from China account for the remaining 15%. While it has nearly halved that impact through adjustments to its global supply chain, operating model and procurement efforts, cost pressures remain.
The company now expects to incur $10-$12 million in tariff costs per quarter in fiscal 2026. Additionally, the international Diagnostics division will continue to be affected by China’s difficult operating environment and reduced funding for the HIV test in Africa.
Final Verdict on HOLX
Hologic’s latest quarterly results highlight its progress toward stronger growth. The underlying strength in Diagnostics, international Surgical momentum and solid financial stability are promising. Breast Health’s sequential improvement reflects early signs of better commercial execution. While the company has made headway in mitigating tariffs, broader economic challenges will still weigh on its performance. Given the attractive valuation of the Zacks Rank #3 (Hold) stock, existing shareholders may find it prudent to hold, while prospective investors should wait for better visibility before entering. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Should You Buy, Sell or Hold Hologic Stock Post Q3 Earnings?
Key Takeaways
On July 30, Hologic (HOLX - Free Report) released its third-quarter fiscal 2025 results after the bell. The U.S. medical equipment manufacturer that specializes in women’s health delivered a performance that surpassed its expectations. Management is now aiming for a return to better top and bottom-line growth in the fourth quarter, thanks to a continued rebound in the Breast Health business and solid performances from the rest of the divisions. The balance sheet remains strong, giving the company ample flexibility both financially and strategically. Since the results, shares of Hologic have risen 4.4%.
The stock has declined 5.9% year to date, lower than the industry’s 8.8% fall. In comparison, peers GE Healthcare (GEHC - Free Report) and Becton, Dickinson and Company (BDX - Free Report) have seen steeper declines.
Hologic’s YTD Performance
Image Source: Zacks Investment Research
Hologic’s Q3: A Quick Recap
The company posted revenues of $1.02 billion and adjusted earnings per share (EPS) of $1.08, both surpassing the respective Zacks Consensus Estimate. The Molecular Diagnostics business led the way, with U.S. sales climbing 7.3% on strong demand for the BV, CV/TV test and the Panther Fusion assays. As anticipated, Cytology and Perinatal revenues declined 2.2% year over year amid the ongoing softness in China.
Meanwhile, overall Diagnostics marked modest 0.9% growth. Hologic’s Breast Health revenues dipped 5.8%, facing its toughest year-over-year comparison. However, revenues of $365.2 million improved from the second quarter and edged past internal expectations. Interventional sales rose 31.8% in the third quarter, led by Endomagnetics. Excluding that, organic interventional sales still grew 6%.
Growth in GYN Surgical was fueled by a 24.8% increase in the International unit, mainly because of stronger adoption in markets with newly established reimbursements and entry into new regions. Skeletal Health revenues surged 62.1% as Hologic resumed shipments for the final DXA model and worked through the pent-up demand from the earlier shipping hold.
Further, the gross margin (non-GAAP) came in at 60.3%, down 80 basis points (bps). The operating margin declined 110 basis points to 30.1%, but it remained among the best in the industry. Hologic generated $343 million in operating cash flow, and ended the quarter with cash and short-term investments of $1.88 billion and an adjusted net leverage ratio of 0.6.
Hologic Updates Its 2025 Forecast
Citing a strong third-quarter performance and lower tariff headwinds, the company has raised the midpoints of its 2025 guidance ranges for both top and bottom lines. Revenues are now projected in the range of $4.08-$4.09 billion and non-GAAP EPS of $4.23 to $4.26. The outlook for the divisions also remains largely unchanged, with Diagnostics expected to grow in the mid-single digits, a low-single-digit decline in Breast Health, and Surgical to expand in high-single digits. On the margin front, Hologic still expects gross and operating margins to land in the low 60s and low 30s, respectively.
The Zacks Consensus Estimate for Hologic’s fiscal 2025 earnings has also edged up 0.7% over the past week. The consensus mark for both fiscal 2025 and 2026 top and bottom lines indicates year-over-year growth.
Image Source: Zacks Investment Research
Two Factors Shaping Hologic
Breast Health Rebound Underway: Hologic remains optimistic about Breast Health, now led by a new commercial leadership team. The team has refined the end-of-life strategy for older gantries, which is set to have a stronger impact in the coming quarters. In terms of product innovation, the company is preparing to launch the Genius AI Detection PRO solution, which expands on Genius AI Detection 2.0 by providing even greater accuracy and efficiency for radiologists. It will be sold as an upgrade on the 3D system and the next-generation Envision platform upon its launch in 2026. Also, Endomagnetics, now transitioned to an organic part of the business, has enhanced Hologic’s Interventional Breast Surgery portfolio.
Diagnostics Remains a Bright Spot: The company continues to make progress in addressing the wide U.S. vaginitis testing gap with the BV, CV/TV assay — now its second-largest assay globally. Biotheranostics is seeing strong adoption of its breast cancer index test, which helps guide decisions around extended endocrine therapy. Hologic plans to diversify its menu in Panther Fusion sidecar over the next several years by launching an IVD test for GI and hospital-acquired infections. Meanwhile, the Genius digital diagnostics system in Cytology offers workflow advantages that help customers manage growing labor shortages while enabling cervical cancer screening in regions with limited infrastructure.
What Valuation Metric Says About HOLX
HOLX shares are trading at a forward five-year price-to-sales (P/S) of 3.55X, which is discounted than the 4.10X industry average.
Hologic’s 5-year P/S vs. Industry
Image Source: Zacks Investment Research
However, it is still expensive than BD and GEHC, which have sales multiples of 2.26 and 1.55, respectively.
Concerns for HOLX
Hologic faces ongoing macroeconomic volatility, including the implementation of a 10% baseline tariff on all U.S. imports. The company previously estimated a quarterly gross tariff impact of $20-$25 million, with about two-thirds of the amount linked to Costa Rica, where it manufactures most of its surgical and interventional breast health products. Shipments of products to and from China account for the remaining 15%. While it has nearly halved that impact through adjustments to its global supply chain, operating model and procurement efforts, cost pressures remain.
The company now expects to incur $10-$12 million in tariff costs per quarter in fiscal 2026. Additionally, the international Diagnostics division will continue to be affected by China’s difficult operating environment and reduced funding for the HIV test in Africa.
Final Verdict on HOLX
Hologic’s latest quarterly results highlight its progress toward stronger growth. The underlying strength in Diagnostics, international Surgical momentum and solid financial stability are promising. Breast Health’s sequential improvement reflects early signs of better commercial execution. While the company has made headway in mitigating tariffs, broader economic challenges will still weigh on its performance. Given the attractive valuation of the Zacks Rank #3 (Hold) stock, existing shareholders may find it prudent to hold, while prospective investors should wait for better visibility before entering. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.