Hologic, Inc.’s HOLX fiscal first quarter of 2025 witnessed robust strength in the molecular diagnostics segment. The company's strategic initiatives look highly promising. Meanwhile, declining COVID-19 sales and a dull macroeconomic scenario may dent Hologic’s operations.

In the past year, this Zacks Rank #3 (Hold) company’s shares have lost 13.3% against the 7.9% growth of the industry and a 23.4% increase of the S&P 500.

The renowned medical device company has a market capitalization of $14.47 billion. Hologic beat on earnings in three of the trailing four quarters and missed in one, delivering an average surprise of 2.53%.

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Tailwinds for HOLX Stock

Molecular Diagnostics Growth Continues: One of the principal revenue-generating components of Hologic’s advanced diagnostic products is the molecular diagnostic assay (Panther, Panther Fusion and Tigris). The expanding global installed base of Panther instruments remains the catalyst for the division's sustained growth. 

For Panther, as customers add more menus and drive incremental volume, Hologic’s Molecular Diagnostics business continues to grow. It becomes more valuable to customers and gets deeply rooted in their operations. 

The molecular diagnostics segment has been a key driver for the division, contributing 11% (excluding COVID-19 sales) to first-quarter fiscal 2025 revenues. The company’s BV CV/TV assay saw another strong quarter of double-digit growth, while the Biotheranostics lab testing business continued to be accretive to growth. Moreover, Hologic’s core women's health assays on the Panther platform delivered a robust performance in the quarter. Panther Fusion adoption is also on the rise, with nearly 40% of U.S. customers utilizing the system as of the fiscal first quarter.

Strategic Initiatives Drive Growth: To streamline its operations and reduce the cost of revenues, Hologic has been adopting a few significant strategies over the past few years. The company has invested deliberately and opportunistically in commercial areas where management has recognized a good return. These include Hologic’s Genius marketing campaign in Breast Health, cervical cancer co-testing initiatives in Diagnostics, along with its efforts to gain competitive market share with NovaSure. 

Earlier this year, Vizient awarded the Innovative Technology Contract to Hologic that expands access to its Surgical product lineup. 

Headwinds for Hologic Stock

Lower COVID Sales Hamper Growth: During the COVID-19 public health emergency, Hologic launched several assays to detect the disease. With the pandemic being in the rear-view mirror, COVID testing demand has also witnessed a nosedive. The declining COVID-19 assay revenues continued to be a headwind to some of the company’s key performance metrics. Hologic continues to expect that the Diagnostics sales growth for fiscal 2025 will be restrained to mid-single digits due to the impact of declining COVID-19 assay sales. 

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Macroeconomic Concerns and Other Uncertainties: Continued concerns about the impact of potential long-term and widespread recession have heightened market volatility and lowered economic growth expectations. Global supply constraints have had an adverse effect on the company’s ability to meet customer demand, while increasing manufacturing, transportation and warehousing costs for certain products. 

With greater visibility into the 2025 market trends, Hologic reduced its full-year revenue guidance by $100 million to a range of $4.05-$4.10 billion. On a divisional level, Hologic anticipates lower Breast Health capital equipment sales this year. 

HOLX Stock Estimate Trend

In the past 30 days, the Zacks Consensus Estimate for Hologic’s fiscal 2025 earnings has moved north 0.2% to $4.28. 

The Zacks Consensus Estimate for HOLX’s fiscal 2025 revenues is pegged at $4.08 billion, suggesting a 1.3% rise from the year-ago reported number.

Key MedTech Picks

Some better-ranked stocks in the broader medical space are Phibro Animal Health PAHC, Veracyte VCYT and Quest Diagnostics DGX. 

Phibro Animal Health has an estimated fiscal 2025 earnings growth rate of 43.7% compared with the industry’s 14.4%. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 27.06%. Its shares have surged 115% compared with the industry’s 15.5% growth in the past year.

PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Veracyte, carrying a Zacks Rank #2 (Buy) at present, has an estimated 2024 earnings growth rate of 138.2% compared with the industry’s 15.4%. Shares of the company have surged 54.4% compared with the industry’s 7.3% growth over the past year. VCYT’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 520.58%.

Quest Diagnostics, carrying a Zacks Rank #2 at present, has an earnings yield of 5.87% compared with the industry’s 4.02%. Shares of the company have rallied 28.4% compared with the industry’s 14.8% growth. DGX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 3.75%.

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