Hologic HOLX is currently trading at a forward price-to-earnings (P/E) multiple of 17.62X, well below the industry average of 32.42X. The company, specializing in medical devices for women’s health, also stands out with respect to industry peers Globus Medical GMED and Masimo MASI, which trade at a higher P/E of 24.25X and 39.01X, respectively. Hologic currently has a Value Score of B.

Price-to-Earnings Forward Twelve Months (F12M)

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Yesterday, HOLX stock ended the trading session at $76.83, up 1.4% from its previous close. The company’s latest breast health innovations, including AI-powered breast imaging advancements for improved cancer detection, are driving significant excitement. With the strong growth potential of several new additions to the portfolio, spanning multiple franchises and geographies, the stock could be potentially undervalued at its current levels.

Despite such a compelling valuation, Hologic shares have underperformed the broader industry and the index over the past year. The stock has risen 9.8%, lagging behind the industry’s 13.1% growth and the S&P 500 composite’s 30.9% gain. The company’s performance has been weighed down by tougher comparisons from fiscal 2023, COVID-19 testing revenue declines and other macroeconomic hurdles.

HOLX One-Year Performance

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Let’s take a closer look.   

Concerns Weighing on Hologic

Like its peers, Hologic faces significant pressures from broader macroeconomic challenges, including the ongoing supply-chain constraints that affect the availability of critical raw materials and components. The global shortage of semiconductor chips, a critical component in some of the company’s products, has already caused significant disruptions. Throughout fiscal 2024, it struggled with massive year-over-year comparisons for certain businesses due to these issues, along with selling days dynamics and normalization of post-COVID-19 revenues.

The company anticipates several transitory challenges in the fiscal 2025 first quarter, particularly in its Skeletal Health business. The segment’s product revenues plunged 38% in fiscal 2024 due to a temporary halt in Horizon DXA shipments caused by a non-conformance matter related to electromagnetic compatibility requirements. The company is actively working to resolve the issue with suppliers and expects to resume this quarter. Competitive pressures have also impacted the sales of Insight FD systems, weighing on the overall performance of the segment.

Hologic is also planning conservatively surrounding the respiratory season and the lingering impacts of recent hurricanes. The ongoing saline IV fluid shortage is likely to be a headwind for the company’s more elective breast and surgical procedures. Moreover, the Interventional Breast segment could also be affected by the BioZorb product withdrawal, backed by the FDA, following the reports of serious adverse events occurring in patients who had the devices implanted in breast tissue.

Technical indicators also signal a bearish trend for the HOLX stock, as it currently lies below the 50-day simple moving average (SMA).

HOLX Below 50-Day SMA

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However, it’s worth considering some of the company’s biggest strengths and promising growth potentials before finalizing any decisions.

Hologic’s Key Growth Opportunities

At the RSNA (Radiological Society of North America) 2024 meeting held this month, Hologic introduced its advanced cancer screening technology, Genius AI Detection PRO solution, for use in the United States. This expands on the Genius AI Detection 2.0 solution by providing even greater accuracy and efficiency, giving radiologists more confidence and helping reduce false positives. Even more impressive, the company’s Genius AI Detection 2.0 software showed similar performance across diverse patient groups in a new study, unlike many AI algorithms that exhibit racial disparities in various applications. With these effective, equitable solutions, HOLX is paving the way to lead in global breast cancer detection.

Moreover, the company continues to capitalize on new opportunities unlocked by its trailblazing product lines like Panther, ThinPrep liquid-based Pap test, 3D mammography and others. The BV/CV/TV vaginitis assay and biotheranostics business will continue to power the Molecular Diagnostics performance.

HOLX is also expanding the global footprint of its Panther Fusion system to meet the demand for high throughput molecular diagnostic respiratory testing while preparing to build additional menu on the platform. Hologic’s FDA-approved Genius Digital Diagnostic System or Digital Pap test combines AI and advanced digital imaging to provide customers more sensitive disease detection and a streamlined efficiency. It was launched for U.S. customers in the most recent fourth quarter.

The company also sees a substantial opportunity to increase its share internationally across all categories of testing it offers. Myosure’s international growth rate is notably higher, driven by the significant untapped potential and sustained demand for minimally invasive treatment options for uterine polyps and fibroids.

In terms of M&A strategy, Hologic mainly focuses on tuck-in deals that align with its three franchises, driving top-line growth and accretive earnings over time. The recent Endomagnetics acquisition in July 2024 and a definitive agreement to acquire Gynesonics in October reflect this approach and fit nicely into the global portfolio. Thanks to its solid financial strength, the company is well-equipped to fund innovation and pull both levers of its capital allocation strategy — tuck-in M&A and share repurchases — at the same time in the coming months.

Conclusion: Hold HOLX Stock for Now

While Hologic faces headwinds from its Skeletal Health division, product withdrawal and macroeconomic pressures, its robust portfolio and new additions offer a solid foundation to deliver sustainable growth. The company continues to effectively execute its M&A strategy, supported by its solid financial strength. The stock’s discounted valuation suggests that investors may be paying a lower price relative to the company's expected earnings growth.

With its attractive valuation, investors may want to hold HOLX stock for now. Those eyeing the stock could wait for a better entry point.

Hologic carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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