On Tuesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on Hologic (NASDAQ:HOLX), a medical technology company, by reducing its price target to $87 from $90, while retaining an Outperform rating on the stock. This change comes in the wake of Hologic's mixed fourth fiscal quarter results, which saw the company surpass revenue expectations by $11 million but only met adjusted earnings per share (EPS) forecasts.
The revenue beat was primarily driven by a strong performance in the Molecular Diagnostics segment, which exceeded expectations by $19 million. However, this success was somewhat dampened by a shortfall in the Skeletal Health division, which missed targets by $3 million, and a lower-than-expected adjusted operating margin (OM) that fell short by 130 basis points.
Looking ahead, Hologic provided guidance for the full year that was somewhat conservative. The company forecasts organic revenue growth of 4% and adjusted EPS growth of 6%, both figures falling below its Long Range Plan (LRP) targets of 5-7% for revenue and 10% for EPS growth.
According to Mizuho, the guidance may place additional pressure on Hologic's stock. Nevertheless, the firm sees potential in the company's core Molecular Diagnostics segment, the possibility of Breast Health upgrades, and strategic mergers and acquisitions to propel revenue towards the higher end of the LRP targets by the end of the year.
Despite the mixed results and conservative guidance, Mizuho maintains its positive stance on Hologic shares. The firm cites the company's discounted valuation, strength in core business areas, and the absence of exposure to GLP-1 treatments as reasons for maintaining the Outperform rating. Mizuho's perspective suggests confidence in Hologic's ability to navigate its current challenges and capitalize on its strengths moving forward.
In other recent news, Hologic reported strong Q4 and full fiscal year 2024 results. The medical technology firm's Q4 revenue reached $987.9 million, and non-GAAP earnings per share (EPS) were reported at $1.01.
For the entire fiscal year of 2024, Hologic achieved a revenue of $4.03 billion and a non-GAAP EPS of $4.08. As a part of recent developments, Hologic provided positive guidance for fiscal 2025, projecting Q1 revenue between $1.025 billion and $1.035 billion, and an annual revenue between $4.15 billion and $4.20 billion.
The company also expects an EPS between $4.25 and $4.35. Despite a temporary shipping halt impacting its Scalable business during Q4, Hologic anticipates a resumption in Q1 2025. Needham has maintained a Buy rating on Hologic following these results. The firm's confidence in Hologic's future performance is reflected in its rating, despite a modest downturn in revenue projections and a temporary impact from the Skeletal Health ship-hold.
InvestingPro Insights
To complement Mizuho's analysis, InvestingPro data offers additional insights into Hologic's financial position. The company's market capitalization stands at $19.45 billion, with a P/E ratio of 28.49, suggesting a moderate valuation relative to earnings. Notably, Hologic's PEG ratio of 0.56 indicates that the stock may be undervalued considering its growth prospects, aligning with Mizuho's view on the company's discounted valuation.
InvestingPro Tips highlight that Hologic's management has been aggressively buying back shares, which could be seen as a vote of confidence in the company's future. Additionally, the stock is trading near its 52-week high, reflecting investor optimism despite the mixed quarterly results.
For investors seeking a deeper understanding of Hologic's potential, InvestingPro offers 8 additional tips, providing a more comprehensive analysis of the company's financial health and market position.
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