Earnings Scorecard: Hologic - Analyst Blog
February 09 2012 - 10:00AM
Zacks
The announcement of
Hologic’s (HOLX) first quarter of fiscal 2012
results as on January 30, 2012, has led analysts to
increase their estimates over the long term. However, the
current headwinds have forced the analysts to take a cautious stand
for the next two quarters.
Previous Quarter
Highlights
The company reported an adjusted
EPS of 34 cents during the first quarter of fiscal 2012, a couple
of cents above the Zacks Consensus Estimate and 4 cents above the
year-ago figure. Revenues were $472.7 million, an increase of 9.3%
year over year and higher than the Zacks Consensus Estimate of $466
million.
Hologic operates through four
segments − Breast Health, Diagnostics, GYN (Gynecology) Surgical
and Skeletal Health − each contributing a corresponding 46%, 33%,
16% and 5% to total revenue during the quarter. These segments
recorded robust growth of 10.2% year over year (at $215.4 million),
10.8% ($154.1 million), 3.8% ($78.5 million) and 10.3% ($24.7
million), respectively.
Hologic provided guidance for the
second quarter of fiscal 2012, which was more or less in line with
the Zacks Consensus Estimate. For fiscal 2012, the company
reiterated its revenue guidance at $1.9−$1.925 billion while the
adjusted EPS guidance was raised by a penny at both ends to
$1.36−$1.38.
For a full coverage on the
earnings, read: Hologic Tops Estimates
Agreement of
Analysts
With economic uncertainty resulting
in lower visits to physicians, estimate revision trend is a bit on
the negative side for the next two quarters. The growth reflected
in the company’s guidance is primarily based on the acquisitions
made in 2011. Over the last 30 days, 3 of the 20 analysts covering
the stock have lowered their estimates for the second quarter of
fiscal 2012, with 2 revisions northward.
On the other hand, over the long
term, optimism among the analysts at large emanates from recent
product launches and a rebound in the GYN Surgical business.
As a result, 17 analysts have increased their estimates, for fiscal
2012, over the last 30 days with no negative revisions. The same
positive trend can be seen for fiscal 2013 with 11 upward revisions
and 3 moving in the opposite direction.
The long-term prospect looks
encouraging based on a number of recent product approvals. These
include approval from US Food and Drug Administration for the
Cervista High Throughput Automation (HTA) system for HPV Screening.
The company also received CE Mark approval for C-View synthesized
2D image reconstruction algorithm for 3D mammography exams and a
nod in China for the Serenity digital mammography system.
Hologic derives more than 30% of
its revenues from the Diagnostics business, which has been
experiencing challenges over the recent past, especially in the US
market (declining 2−3% annually). However, the situation seems to
be improving gradually with slowly recovering volume and stable
pricing. Besides, the company’s new Dimensions 3D system is gaining
traction and is expected to be an important growth driver for the
Breast Health segment. The company is also confident of being able
to achieve the target of placing 500-700 3D systems in the US
within the first two years.
Magnitude of Estimate
Revisions
Given few revision trends, the
consensus estimate for the second quarter was static at 33 cents in
the past 30 days. The consensus estimate for fiscal 2012 increased
by a penny to $1.38 (and by 2 cents for fiscal 2012 to $1.51) over
the last 30 days indicative of market optimism on the back of an
improving environment and new products gaining traction.
Neutral on
Hologic
Offering a wide range of products,
Hologic has become an industry giant in the field of women’s health
products. Moreover, the company is also undertaking several steps,
including acquisitions, international expansion and product
development to bolster its top line. We are encouraged by the
recent product approvals, which should help the company in
recording higher sales going forward. Hologic also received a
favorable ruling regarding injunction on sales of Adiana with its
peer Conceptus (CPTS).
With the company’s focus on the
international market, revenues from foreign destinations have been
recording steady growth. Hologic has been building its
international infrastructure and fortifying management resources,
particularly in the emerging markets of China, Latin America,
Middle East and Eastern Europe. Revenues from the international
market should accelerate following CE Marking of the MTA system and
the SFDA approval in China for its Serenity digital mammography
system (derived from the Healthcome acquisition). Serenity is a
lower cost digital mammography system targeted for certain segments
of the Chinese market. The stock retains a Zacks #2 Rank (Buy) in
the short term.
However, the company continues to
be affected by lower visits to physicians due to the prevailing
economic uncertainty. Over the long term, we have a Neutral
recommendation on Hologic.
About Earnings Estimate
Scorecard
Len Zacks, PhD in mathematics
from MIT, proved over 30 years ago that earnings estimate revisions
are the most powerful force impacting stock prices. He turned this
ground breaking discovery into two of the most celebrating stock
rating systems in use today. The Zacks Rank for stock trading in a
1 to 3 month time horizon and the Zacks Recommendation for
long-term investing (6+ months). These “Earnings Estimate
Scorecard" articles help analyze the important aspects of estimate
revisions for each stock after their quarterly earnings
announcements. Learn more about earnings estimates and our proven
stock ratings at http://www.zacks.com/education/
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HOLOGIC INC (HOLX): Free Stock Analysis Report
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