On Apr 5, we reaffirmed our long-term Neutral recommendation on
Hologic ( HOLX ) as the numerous
headwinds in play might limit the growth prospects of the company.
This leading player in the field of women's health carries a Zacks
Rank #3 (Hold).CEPHEID INC (CPHD): Free Stock Analysis ReportCYBERONICS INC (CYBX): Free Stock Analysis
ReportGIVEN IMAGING (GIVN): Free Stock Analysis
ReportHOLOGIC INC (HOLX): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment
Hologic continues to record robust sales growth on the back of the
Gen-Probe acquisition in Aug 2012. The company envisages cost
synergies of over $40 million by the end of the first year of the
takeover and an additional $35 million by the end of the third
year. We also look forward to revenue synergies from the
complementary product portfolio, cross-selling opportunities and
enhanced global footing.
Revenues from Hologic's largest segment - Diagnostics are soaring,
primarily led by the Gen-Probe portfolio. Under the Breast Health
segment, the ongoing shift from the company's legacy Selenia to the
higher-priced Dimesions product line is a highly profitable trend.
The results from the Oslo clinical trial, competitive wins and
positive reimbursement decision should catalyze growth
Hologic's growth in the international market is also encouraging.
The company has taken up inorganic means to support growth,
especially in emerging markets - a strategy which is already
yielding positive results.
However, sales in the European market remain lumpy due to the
economic environment. The margin erosion on Diagnostics and Breast
Health franchise is another downside for Hologic. The company,
operating in a highly competitive industry, also faces challenges
like slower sales cycles and increasing pricing pressure for its
Evidently, unfavorable patent ruling has hurt sales in the past
and we remain watchful on the company's patent sphere going
forward. Further, higher interest expense is a looming concern and
will continue to affect the profitability in the near-term.
Other Stocks to Consider
While we remain on the sidelines for Hologic, other medical stocks
such as Cyberonics ( CYBX ),
Cepheid ( CPHD ) and
Given Imaging ( GIVN ) are likely to
do well. These stocks carry a Zacks Rank #1 (Strong Buy).