Yahoo Finance Why Is Hologic (HOLX) Down 6.3% Since Last Earnings Report?
It has been about a month since the last earnings report for Hologic (HOLX). Shares have lost about 6.3% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Hologic due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Hologic's Q2 Earnings Beat Estimates, 2023 View Up
Hologic reported adjusted earnings per share (EPS) of $1.06 in second-quarter fiscal 2023, down 48.8% year over year. However, the bottom line surpassed the Zacks Consensus Estimate by 20.5%.
The adjustments include charges and benefits related to the amortization of acquired intangible assets, certain asset impairment charges and restructuring and integration/consolidation costs, among others.
The company’s GAAP EPS were 87 cents in the quarter compared with the year-ago quarter’s EPS of $1.80, reflecting a 51.7% plunge.
Revenues in Detail
Revenues totaled $1.03 billion in the reported quarter, declining 28.5% year over year (down 27.5% at the constant exchange rate or CER). The metric surpassed the Zacks Consensus Estimate by 6.2%. Lower sales of COVID-19 assays dragged the top line.
Segments in Detail
In the fiscal second quarter, U.S. revenues totaled $768.7 million and declined 22.5%. International revenues amounted to $257.8 million, falling 41.9% year over year or 38.5% at CER.
Revenues in the Diagnostics segment declined 52.9% year over year (down 52.2% at CER) to $464.7 million in the quarter under review. Excluding COVID-19 revenues, Diagnostics revenues increased 13% on a reported basis and 14.9% at CER.
Cytology & Perinatal revenues of $111.9 million were down 0.7% at CER. Molecular Diagnostics revenues of $342.2 million declined 59.8% at CER. Blood Screening revenues of $10.6 million fell 15.2% year over year at CER.
Revenues in the Breast Health segment rose 27.1% from the year-ago period’s (up 28.8% at CER) levels to $311.5 million. Outside the United States, Breast Health sales increased 42.5% at CER. The upside was driven by the improving semiconductor chip supply, enabling additional gantry deliveries within the quarter and resulting in higher capital equipment revenues compared with the prior-year period’s levels.
Revenues in the GYN Surgical business rose 23.4% year over year (up 25.2% at CER) to $144.8 million, led by improved procedure volume as COVID prevalence declined.
Revenues at Skeletal Health increased 51.2% year over year (up 53.4% at CER) to $31.6 million.
Operational Update
In the fiscal second quarter, the company-provided adjusted gross margin contracted 890 basis points (bps) to 62.1%. According to the company, the downside in gross margin was primarily due to a year-over-year decline in COVID-19 assay sales.
The company’s adjusted operating margin was 31.3%, contracted 1610 bps.
Financial Update
Hologic ended second-quarter fiscal 2023 with cash and cash equivalents of $2.58 billion compared with $2.34 billion at the end of first-quarter fiscal 2023.
Total long-term debt (including the current portion) was $2.79 billion at the end of the fiscal second quarter compared with $2.80 at the end of the fiscal first quarter.
Net cash provided by operating activities at the end of the fiscal second quarter was $459.7 million compared with $1.63 billion a year ago.
Guidance
Hologic issued the guidance for the third quarter and raised fiscal 2023 guidance.
For fiscal 2023, the company projects revenues within $3.92-4.03 billion (up from the previous guidance of $3.85-4.00 billion), suggesting a year-over-year decline in the range of 19.3-17.2% on a reported basis, 18.5-16.4% at CER and 18.7-16.6% organically. The Zacks Consensus Estimate for fiscal 2023 revenues is pegged at $3.97 billion.
Adjusted earnings per share for fiscal 2023 are now estimated within $3.75-$3.95 (up from the previous guidance of $3.55-$3.85), with a projected decline of 37.7-34.4% year over year. The Zacks Consensus Estimate for fiscal 2023 earnings per share is pegged at $3.74.
For third-quarter fiscal 2023, the company projects revenues within $930-$980 million, suggesting a year-over-year decline in the range of 7.2-2.3% on a reported basis, 6.9-1.9% at CER and 6.8-$1.8% organically. The Zacks Consensus Estimate for second-quarter fiscal 2023 revenues is pegged at $953.7 million.
Adjusted earnings per share (EPS) for the third quarter are estimated within 83-93 cents, suggesting a decline of 12.6-2.1% year over year. The Zacks Consensus Estimate for second-quarter fiscal 2023 EPS is pegged at 87 cents.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in estimates revision.
VGM Scores
At this time, Hologic has an average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Hologic has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
Performance of an Industry Player
Hologic belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Intuitive Surgical, Inc. (ISRG), has gained 1.9% over the past month. More than a month has passed since the company reported results for the quarter ended March 2023.
Intuitive Surgical, Inc. reported revenues of $1.7 billion in the last reported quarter, representing a year-over-year change of +14%. EPS of $1.23 for the same period compares with $1.13 a year ago.
Intuitive Surgical, Inc. is expected to post earnings of $1.32 per share for the current quarter, representing a year-over-year change of +15.8%. Over the last 30 days, the Zacks Consensus Estimate has changed -1.6%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Intuitive Surgical, Inc. Also, the stock has a VGM Score of D.
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