Is Hologic Stock's Low Valuation an Opportunity or a Value Trap?
HOLX Five-Year Forward P/S
The valuation also compares favorably to peers QIAGEN QGEN and Abbott ABT, which have a P/S of 3.30X and 2.50X, respectively. Still, the stock trades at a premium to the broader Medical sector's historical five-year average of 2.33X.
A tough macroeconomic environment, shifting policy landscape and soft end-market trends have created headwinds for the company since the beginning of fiscal 2025. Hologic shares are down 10.8% year to date, lagging behind the industry's 7.8% decline and the S&P 500 composite's 6.2% gain. In contrast, QIAGEN shares have risen 3.7%, while Abbott has outpaced all with its 18.1% gain in the same time frame.
YTD Snapshot: HOLX vs. Industry & Peers
What's Dragging Hologic's Performance?
The company returned to top-line growth in the third quarter of fiscal 2024 after a prolonged period of COVID-19-related slowdown. However, fiscal 2025 has seen a mixed performance. First-quarter revenues rose just 0.9%, held back by an approximately $9 million headwind from a stronger U.S. dollar. The second quarter saw a 1.2% year-over-year decrease, mainly due to a 7.4% revenue drop in Breast Health revenues from lower sales of mammography capital equipment.
Hologic's Molecular Diagnostics business also faced challenges from reduced HIV testing sales in Africa following the cease of USAID funding by the Trump administration. The $50 million annual revenue stream has now been conservatively removed from the company's fiscal 2025 outlook. In cytology and perinatal businesses, strong U.S. adoption of the Genius AI product was offset by a modest decline internationally due to a physician strike in South Korea and reduced hospital spending in China. Meanwhile, after delivering sequential adjusted earnings per share (EPS) growth in recent months, Hologic reported flat EPS in the second quarter.
In the coming quarters, tariff-related pressures are expected to have a profound impact on Hologic's operations. The company reaffirmed its revenue guidance but lowered its adjusted EPS forecast to $4.15-$4.25 from the prior $4.25-$4.35 range. Management expects a $20-$25 million quarterly gross impact tied to its manufacturing activities in Costa Rica and China. To minimize exposure to future geopolitical risks, Hologic cut its full-year China revenue forecast by approximately $20 million, now expecting around $50 million.
Hologic's Earnings Estimate Revisions Slide
Analysts are turning increasingly cautious on Hologic's earnings outlook. Over the past 90 days, the Zacks Consensus Estimate for the company's fiscal 2025 EPS has decreased 2.1% to $4.19, while the consensus mark for fiscal 2026 has dipped 2.6% to $4.50. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)
Meanwhile, both QIAGEN and Abbott's 2025 and 2026 earnings estimates are displaying an upward trend.
Hologic's Positives to Note
The company's strategy of building durable growth drivers across each of its global businesses continues to pay off. Here are two key tailwinds that continue to stand out.
Strength in GYN Surgical: Hologic's Surgical business has delivered a 7.6% compound annual growth rate (CAGR) over the last 10 years, led by its minimally invasive treatment of fibroids products — MyoSure and the related Fluent fluid management system. A key driver is the International business, which grew 16.2% in the fiscal second quarter, as Hologic advances market development and boosts awareness for its GYN offerings. NovaSure is seeing solid uptake overseas despite declining U.S. growth, while Accesa is growing faster than the core business. The January 2025 acquisition of Gynesonics enhanced the Surgical segment by bringing SOMATEX — a minimally invasive radiofrequency ablation tool to treat uterine fibroids that are less accessible by MyoSure or Accesa. In fiscal 2025, Hologic expects low-single-digit organic Surgical growth, supported by International momentum and the rising adoption of the new Fluent Pro Fluid Management System.
Solid Financial Health: The company's fortress balance sheet and consistent cash flows give it ample strategic and financial flexibility. In the second quarter of fiscal 2025, Hologic generated $169.5 million in operating cash, driven by its market-leading brands. As of March-end, it had cash and equivalents of $1.43 billion, $192 million in short-term investments and an adjusted net leverage of just 0.8X. The company continues to look for tuck-in opportunities across its three core franchises, as seen with the recent deals like Endomagnetics and Gynesonics, as well as Biotheranostics (2021). Hologic also remains committed to returning value to shareholders, having repurchased more than $4.5 billion of stock since 2016, including $200 million in the second quarter.
Endnote on HOLX Stock
Hologic's ongoing momentum in its Surgical division and financial stability are noteworthy, but macroeconomic headwinds have continued to weigh on its performance. The decline in Breast Health sales, the loss of the HIV testing business in Africa and China's difficult operating landscape have impacted results. Despite an attractive valuation compared to peers and industry, the stock has underperformed both so far this year. The negative earnings estimate trend reinforces the outlook of continued near-term challenges. Considering all factors, Hologic doesn't offer a very compelling investment case right now.
HOLX stock currently has a Zacks Rank #4 (Sell).
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Zacks' Research Chief Picks Stock Most Likely to "At Least Double"
Our experts have revealed their Top 5 recommendations with money-doubling potential – and Director of Research Sheraz Mian believes one is superior to the others. Of course, all our picks aren't winners but this one could far surpass earlier recommendations like Hims & Hers Health, which shot up +209%.
See Our Top Stock to Double (Plus 4 Runners Up) >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Abbott Laboratories (ABT): Free Stock Analysis Report
Hologic, Inc. (HOLX): Free Stock Analysis Report
QIAGEN N.V. (QGEN): Free Stock Analysis Report
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Globe and Mail
22 minutes ago
- Globe and Mail
Piper Sandler Expands Technology Investment Banking Team with the Addition of Anson Tsai
Piper Sandler Companies (NYSE: PIPR), a leading investment bank, is pleased to announce the addition of Anson Tsai as a managing director to its technology investment banking team. He will be based in the Burlingame office. 'We are excited to welcome Anson to Piper Sandler. Anson's sector experience and deep client relationships will have an immediate impact on our fast-growing team. We look forward to seeing his contributions to the firm and our clients,' said Steven Schmidt, co-head of technology investment banking at Piper Sandler. Prior to joining the firm, Tsai spent ten years with Bank of America Securities on their technology investment banking team. He focused on front-office software coverage, sourcing and executing M&A, IPO, equity and debt financing transactions for both public and private software companies. Before investment banking, he spent nearly eight years in front-office related roles, including sales and marketing management consulting, e-commerce marketing and business development, and event management and marketing. Tsai received a bachelor's degree in electrical engineering and computer sciences from the University of California at Berkeley and earned his Master of Business Administration degree from Cornell University. 'Anson is highly respected across the industry and brings with him tremendous expertise. During his career, Anson has advised on some of the industry's most strategic transactions across the front-office software space. His wealth of knowledge and significant experience will allow us to better serve our clients,' said Brian White, co-head of technology investment banking at Piper Sandler. ABOUT PIPER SANDLER Piper Sandler Companies (NYSE: PIPR) is a leading investment bank driven to help clients Realize the Power of Partnership®. Securities brokerage and investment banking services are offered in the U.S. through Piper Sandler & Co., member SIPC and NYSE; in the U.K. through Piper Sandler Ltd., authorized and regulated by the U.K. Financial Conduct Authority; in the EU through Aviditi Capital Advisors Europe GmbH, authorized and regulated by BaFin as a tied agent of AHP Capital Management GmbH; and in Hong Kong through Piper Sandler Hong Kong Limited, authorized and regulated by the Securities and Futures Commission. Alternative asset management and fixed income advisory services are offered through separately registered advisory affiliates.
Globe and Mail
25 minutes ago
- Globe and Mail
CrowdStrike vs. Cloudflare: Which Cybersecurity Stock Wins?
CrowdStrike Holdings Inc. (NASDAQ: CRWD) is one of the best-performing technology stocks of 2025, with shares up 50% year-to-date. That rally reflects renewed investor confidence in its Falcon platform, which is a true comeback story following the high-profile service outage in 2024. The total addressable market (TAM) for cybersecurity solutions is expected to exceed $500 billion by 2030. This means many companies are looking for their share of the pie. Cloudflare Inc. (NYSE: NET) is one of those names. In fact, NET stock is up 80% this year, a full 30 percentage points ahead of CrowdStrike. The opportunity in this sector can certainly support investors having more than one cybersecurity stock in their portfolio. But if an investor could only choose one, which of these names might be more attractive? These two cloud-native cybersecurity leaders offer solutions that often appear to overlap. However, their business models, core technologies, and growth trajectories are distinctly different. CrowdStrike's Falcon Platform Changed the Industry The core of CrowdStrike's business is its Falcon platform. This allows customers to take an à la carte approach to their cybersecurity needs, using as much or as little of the Falcon platform as they need. Several legacy security vendors, such as Palo Alto Networks Inc. (NASDAQ: PANW), began pivoting to platform-based models in the mid-2010s. However, CrowdStrike distinguished itself as an early pioneer of a cloud-native security platform. By launching Falcon as an integrated endpoint and threat intelligence solution from day one, CrowdStrike set the standard for how a modern, scalable cybersecurity platform could replace fragmented point products This platformization model was a key lever that CrowdStrike pulled as it worked to regain customer trust after the 2024 outage. It offered customers the opportunity to use some of Falcon's platform services at no cost for a limited time. The company now expects its goodwill measure to turn into actual revenue in the coming quarters. Cloudflare Is Taking Aim at the Zero Trust Space Cloudflare's Cloudflare One suite is a cloud-native platform that combines a range of services delivered from the same infrastructure that powers its CDN and DDoS protection. While Cloudflare still derives most of its revenue from networking and CDN services, the company is rapidly emerging as a force in Zero Trust security. Its Cloudflare One suite delivers identity, access, and application protection at the edge without relying on traditional firewalls. With one of the largest global edge networks, Cloudflare is well-positioned to scale Zero Trust access with low latency and high security. Zero Trust remains a relatively small part of Cloudflare's overall revenue, but its freemium, self-serve model gives it a massive top-of-funnel that it can leverage to convert more paid Zero Trust and enterprise security customers over time. How CRWD and NET Stocks Are Similar and Different As noted in the introduction, CrowdStrike and Cloudflare are both having strong years. However, both are overvalued when you compare their respective stock prices to analysts' consensus price targets. That suggests both stocks could be ready for significant pullbacks. So, which stock makes more sense to buy when that dip occurs? That may depend on your investment objectives and risk tolerance. CrowdStrike is a profitable, large-cap cybersecurity leader with a proven platform and strong customer retention. CRWD stock is better suited for investors seeking quality growth with a slightly lower risk profile. Cloudflare is still in its high-growth, high-spending phase. It lacks profitability but boasts higher year-to-date returns and a strong vision for Zero Trust dominance. It's better aligned with investors who can stomach volatility in pursuit of long-term upside. The cybersecurity sector is expanding rapidly, and both CrowdStrike and Cloudflare are well-positioned to benefit. As always, do your own due diligence and consider whether one or both of these cybersecurity leaders deserve a place in your portfolio. Where Should You Invest $1,000 Right Now? Before you make your next trade, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. Our team has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and none of the big name stocks were on the list.
CTV News
27 minutes ago
- CTV News
EU, South Korea seek U.S. trade deals to ease tariff pain
President Donald Trump speaks during a roundtable discussion with first responders and local officials at Hill Country Youth Event Center in Kerrville, Texas, during a tour to observe flood damage, Friday, July 11, 2025. (AP Photo/Jacquelyn Martin) BRUSSELS/SEOUL — The European Union and South Korea said on Monday they were working on trade deals with U.S. President Donald Trump that would soften the blow from looming tariffs as Washington threatens to impose hefty duties from Aug. 1. Trump stepped up his trade war on Saturday, saying he would impose a 30 per cent tariff on most imports from the EU and Mexico from next month, adding to similar warnings for other countries including Asian economic powerhouses Japan and South Korea. Speaking in Brussels, where EU trade ministers discussed the tariff threat, European Trade Commissioner Maros Sefcovic warned that a 30% tariff would practically eliminate trade between the U.S. and the 27-nation bloc, which are currently each other's largest trading partners. He expressed optimism, however, that talks between Washington and the EU were approaching a positive outcome for both sides. 'We have to do, and I will definitely do, everything I can to prevent this super-negative scenario,' Sefcovic said. White House Economic Adviser Kevin Hassett had said on Sunday that countries' trade deal offers so far had not satisfied Trump, adding that without improvements to their proposals 'the tariffs are real.' 'The president thinks that deals need to be better,' Hassett told ABC's This Week program. 'And to basically put a line in the sand, he sent these letters out to folks, and we'll see how it works out.' The threatened duties sounded alarm bells in Germany, the EU's biggest economy. After Chancellor Friedrich Merz said on Sunday that a 30% tariff would 'hit the German export industry to the core,' the head of the German Chamber of Commerce and Industry called for swift action. 'The escalating tariff conflict with the USA poses a serious threat to many German companies,' Volker Treier said on Monday. 'Tough negotiations are now needed to avert a collapse of transatlantic trade.' The EU has so far held off on retaliatory measures to avoid a spiraling tit-for-tat escalation in the trade war while there remains a chance of negotiating an improved outcome. But Italy's Foreign Minister Antonio Tajani said the EU has already prepared a list of tariffs worth 21 billion euros (US$24.5 billion) on U.S. goods if the two sides fail to reach a trade deal. European industries, meanwhile, are preparing for the worst. Producers of Italy's renowned Chianti wine in Tuscany have demanded a new export strategy backed by the EU targeting alternative markets such as South America, Asia and Africa in response. Markets left guessing Since returning to the White House earlier this year, Trump has sought to use an array of tariffs to boost the U.S. economy, push companies to invest in the United States, and revitalize sectors including manufacturing. His initial 'Liberation Day' tariff announcement in April, which set a baseline tariff of 10 per cent on all imports and higher duties on certain products or countries, raised fears of global supply chain disruptions, sending shockwaves through markets. But subsequent U-turns and delays, including a 90-day pause on most duties aimed at allowing time for trade deal negotiations, have left investors largely inured to Trump's chaotic policy roll-outs. European stocks fell on Monday, while U.S. futures pointed towards a lower Wall Street open in response to the latest salvo. European autos and alcohol stocks were among those hardest hit. Scramble for deals The looming Aug. 1 deadline has set off a scramble by governments around the world to seal trade agreements. South Korea's top trade envoy said on Monday it may be possible to strike an 'in-principle' deal by the deadline and signaled that Seoul may be open to allowing the U.S. greater access to its agriculture markets, local media reported. Minister for Trade Yeo Han-koo, who held high-level talks with U.S. officials last week, said South Korea was seeking to avoid 'unfair' U.S. tariffs on sectors key to its industrial prowess that would undermine industrial cooperation with its main security ally and trading partner, media reports said. 'I believe it's possible to reach an agreement in principle in the U.S. tariff negotiations, and then take some time to negotiate further,' the Newsis news agency quoted Yeo as telling local media reporters. 'Twenty days are not enough to come up with a perfect treaty that contains every detail,' he added. South Korea is in a race to reach a compromise trade pact in the hope of avoiding a 25 per cent tariff slapped on its exports, the same level faced by Japan. (Additional reporting by Milan Strahm, Cristina Carlevaro, David Lawder, John Revill, Andreas Rinke, Wayne Cole and Emma RumneyWriting by Keith WeirEditing by Joe Bavier)
