HOLX - Why Hologic Stock Belongs in Your Portfolio

Hologic (HOLX) is one of the 9 stocks featured in a new special report. Claim your copy now! 9 “MUST OWN” Growth Stocks for 2021.

Hologic (HOLX), known for creating products for women's healthcare needs, recently delivered a strong fiscal first quarter with organic growth of 104% year-over-year. This growth was driven by molecular testing.

HOLX is a leading manufacturer of medical device products focused on women's healthcare needs and molecular testing. Its portfolio includes products for mammography, breast biopsy, early-stage breast cancer treatment, diagnostics, and medical aesthetics products.

The company controls about two-thirds of the U.S. digital mammography market and leads the industry in 3D mammography. It also sells ancillary accessories for mammograms and biopsies. HOLX gets government reimbursements for 3D mammography, which adds to the company's bottom line.

Due to its acquisition of Gen-Probe in 2012, HOLX holds the top position in various molecular diagnostic tests focused on women's health. The acquisition also gave the company a leading position in testing for chlamydia and gonorrhea. Plus, HOLX controls a massive share of the U.S. liquid-based Pap market.

Testing for COVID has given the company a strong tailwind since last year. This is expected to continue through the end of the year as there will likely be on-going flare-ups. Or the viral variants from Brazil and South Africa could start to spread in the U.S.

While COVID will provide a stream of testing revenue, HOLX's entry into viral-load testing will provide an additional boost, especially with the stabilization of the HPV testing market. Plus, in November, the FDA approved a diagnostic claim for its HIV-1 viral load monitoring assay.

Earlier this year, HOLX announced its plans to acquire Biotheranostics, a commercial-stage company that provides molecular diagnostic tests for breast and metastatic cancers. This acquisition would enable HOLX's entry into the robust and fast-growing oncology adjacency.

The company has undertaken several initiatives to streamline its operations and reduce costs. For instance, HOLX has invested opportunistically in areas where management sees a good return. Plus, the company has been working on product innovations and product launches to strengthen its product pipeline.

Global expansion is also a major growth catalyst. HOLX leads the industry in the United States but holds a low market share internationally. The international market provides untapped potential for the company. Over the past few years, international sales have been a major catalyst.

In the long run, the company should benefit from the recent placements of its Panther diagnostic systems. Even when Covid testing declines, these system placements should drive recurring revenue from non-COVID tests.

HOLX has an overall grade of A, which translates into a Strong Buy rating in our POWR Ratings system. It also has a Growth Grade of A, which makes sense as the company saw a whopping 473% growth in earnings over the past year. This was driven by strong customer adoption of its two SARS-CoV-2 tests. The company also has a Value Grade of A due to its low valuation. The stock has a trailing P/E of 13.45 and a forward P/E of 8.47.

POWR Ratings also provides grades based on Momentum, Stability, Sentiment, and Quality, which you can find here. HOLX is ranked #1 in the Medical – Devices & Equipment industry. You can find other top stocks in that industry here.

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HOLX shares were trading at $71.92 per share on Monday afternoon, up $1.14 (+1.61%). Year-to-date, HOLX has declined -1.25%, versus a 6.03% rise in the benchmark S&P 500 index during the same period.

About the Author: David Cohne

David Cohne has 20 years of experience as an investment analyst and writer. Prior to StockNews, David spent eleven years as a Consultant providing outsourced investment research and content to financial services companies, hedge funds, and online publications. David enjoys researching and writing about stocks and the markets. He takes a fundamental quantitative approach in evaluating stocks for readers.

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