On Tuesday, Citi reiterated its Buy rating on Hologic (NASDAQ:HOLX) stock, maintaining a price target of $95.00. Following investor meetings in Boston last week with Hologic's management, including CFO Karleen Oberton, the focus was on the company's financial outlook leading into fiscal year 2025 and its margin opportunities.
Management expressed confidence in achieving approximately 31.5% operating profit margin (OPM) by 2025 and discussed various factors influencing revenue projections for the coming year.
Investors were particularly interested in the potential challenges and growth drivers for Hologic. The discussions covered several topics, including headwinds facing the Skeletal Health business, the implications of the US Preventive Services Task Force (USPSTF) recommendations, the potential of next-generation gantry systems, and the company's strategy for capital allocation.
Despite a backdrop of economic uncertainty, Hologic has demonstrated consistent performance, which Citi highlighted as a reason for their positive stance. The firm adjusted its financial model for Hologic to incorporate the latest insights provided by the company's management regarding fiscal year 2025.
Citi's reaffirmed Buy rating and price target reflect its outlook on Hologic's ability to execute its business strategy effectively. The company's stock continues to be seen favorably by Citi as it navigates through the current market environment.
In other recent news, JPMorgan (NYSE:JPM) recently adjusted its financial outlook on the company, raising the stock price target to $95 from $91 while maintaining a neutral stance. This follows Hologic's third fiscal quarter report, which exceeded expectations, featuring revenues of $1.011 billion and an adjusted earnings per share (EPS) of $1.06.
Several factors contributed to the company's strong performance, including a 10.5% growth in Molecular Diagnostics and a 7.1% growth in Breast Health. Despite a temporary shipping halt in its non-core Skeletal business and the recall of BioZorb, Hologic has demonstrated resilience, revising its full-year 2024 revenue guidance and expecting an adjusted EPS for fiscal year 2024 to be between $4.04 and $4.11.
The company also repurchased $100 million in shares during this period and completed the acquisition of Endomagnetics, which is expected to contribute to future growth. These recent developments highlight Hologic's ability to navigate challenges and continue its growth trajectory. As indicated by JPMorgan, Hologic is on track to meet its long-term financial goals, which include top-line growth of 5-7% excluding COVID impacts.
InvestingPro Insights
As Hologic (NASDAQ:HOLX) remains a topic of interest following Citi's reaffirmed Buy rating, InvestingPro data and tips provide additional context for investors considering the company's prospects. The management's confidence in achieving a 31.5% operating profit margin by 2025 is mirrored by a notable InvestingPro Tip that highlights management's aggressive share buybacks, which could signal their belief in the company's value. Furthermore, with a P/E ratio of 27.48 and an adjusted P/E ratio for the last twelve months as of Q3 2024 at 22.94, Hologic trades at a low P/E ratio relative to near-term earnings growth, indicating potential for investors.
InvestingPro data also shows a solid financial footing with revenue for the last twelve months as of Q3 2024 at $3.987 billion and a robust gross profit margin of 60.58%. Moreover, the company's liquid assets surpass short-term obligations, reflecting a healthy balance sheet. Despite a slight revenue decline of 1.26% over the last twelve months as of Q3 2024, Hologic has experienced a quarterly revenue growth of 2.74% in Q3 2024, suggesting a positive trajectory.
For investors seeking further insights, there are additional InvestingPro Tips available, such as the company's high shareholder yield and expectations for net income growth this year. These tips, among others, can be explored in detail on the InvestingPro platform for Hologic at https://www.investing.com/pro/HOLX.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.