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Can Diagnostics Aid Hologic (HOLX) Q4 Sales Amid Coronavirus?

Hologic, Inc. HOLX is slated to report fourth-quarter fiscal 2020 results on Nov 4, after the closing bell.

In the last-reported quarter, the company’s earnings of 75 cents outpaced the Zacks Consensus Estimate by 108.3%. Moreover, its earnings surpassed the consensus estimate in two of the last four quarters and met the mark in the other two. The trailing four-quarter average surprise was 28.47%.

Let's see how things are shaping up prior to the announcement.

Factors at Play

Diagnostics

Hologic expects its Diagnostics segment to have maintained a stellar performance in fiscal fourth quarter on robust performance by its new Molecular Diagnostics testing products for coronavirus.

Notably, in August, Hologic validated the use of its Aptima and Panther Fusion molecular diagnostic COVID-19 assays with pooled patient samples. The company also completed an emergency use notification to the FDA for the same to make this workflow available to laboratory customers in the United States. The company also received the FDA’s Emergency Use Authorization for its Panther Fusion SARS-CoV-2 assay in September. All these developments are expected to have significantly contributed to the company’s fiscal fourth-quarter revenues.

Hologic, Inc. Price and EPS Surprise

Hologic, Inc. Price and EPS Surprise

Hologic, Inc. price-eps-surprise | Hologic, Inc. Quote

Hologic’s Aptima SARS-CoV-2 assay, which runs on its Panther system, is likely to have maintained its stellar performance given the upsurge in pandemic-led testing requirements. Similar to the fiscal third quarter, the company expects global Molecular Diagnostics revenues in the fourth quarter to reflect the benefits of additional tests, including the COVID-19 assays, onto Hologic’s Panther installed base.

The company’s Panther and Panther Fusion instruments have likely maintained momentum, thus contributing to the top line. The Molecular Diagnostics segment is expected to have witnessed global growth in the quarter on strength in the Panther system.

The Zacks Consensus Estimate for Molecular Diagnostics’ revenues is pegged at $652 million, suggesting a stupendous upsurge of 279.1% from the year-ago quarter’s reported figure.

GYN Surgical

During fiscal third-quarter earnings call, Hologic confirmed that it witnessed a quicker-than-expected strengthening of the surgical division. This is likely to have continued during fiscal fourth quarter due to the clinical need for the products and hospital customers addressing the pent-up demand. This is likely to have driven the top line during the quarter.

Outside the United States, organic revenues are likely to have continued to improve as many of the countries began to recover from the pandemic earlier than the United States. This is expected to have boosted the quarter’s revenues.

The Zacks Consensus Estimate for GYN Surgical’s revenues is pegged at $94 million, suggesting a 18.3% drop from the year-ago quarter’s reported figure.

Breast Health and Skeletal Health

Management, during the previous earnings call, expected the breast health segment to report lower year-over-year sales in fiscal fourth quarter due to slower recovery rate of the segment. Per management, in Breast and Skeletal health, recurring revenues such as services should continue to partially offset a steeper decline in capital sales. The company, however, expected a sequential improvement in sales.

Meanwhile, Hologic, in August, announced improvements to the Brevera Breast Biopsy System with CorLumina Imaging Technology. In July, the company announced the U.S. launch of the SuperSonic MACH 40 ultrasound system, thus expanding its suite of ultrasound technologies with its first premium cart-based system. These developments are expected to have contributed robustly to the company’s breast health arm’s revenues.

The Zacks Consensus Estimate for the Breast Health segment’s revenues is pegged at $255 million, indicating a decline of 25.7% from the prior-year quarter’s figure. The Zacks Consensus Estimate for the Skeletal Health segment’s revenues is pegged at $19.8 million, indicating a decline of 21% from the prior-year quarter’s figure.

Q4 Estimates

The Zacks Consensus Estimate for fourth-quarter fiscal 2020 revenues is pegged at $1.16 billion, suggesting a 33.6% improvement from the year-ago figure.

The Zacks Consensus Estimate for the company’s earnings of $1.22 suggests an 87.7% upsurge from the year-ago figure.

What Our Model Suggests

Our proven model predicts an earnings beat for Hologic this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Hologic has an Earnings ESP of +20.90%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to beat on earnings this reporting cycle.

LHC Group, Inc. LHCG has an Earnings ESP of +1.85% and it currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.

IDEXX Laboratories, Inc. IDXX has an Earnings ESP of +0.35% and is a Zacks #2 Ranked stock.

Quidel Corporation QDEL has an Earnings ESP of +8.14% and it flaunts a Zacks Rank of 1 at present.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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