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Can Segmental Growth Aid Hologic (HOLX) in Q4 Earnings?

Hologic, Inc. HOLX is slated to report fourth-quarter fiscal 2019 results on Nov 6, after the closing bell. In the last reported quarter, the company recorded a positive earnings surprise of 3.3%. Its earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, the average beat being 1.3%.

Let's see how things are shaping up prior to this announcement.

Key Catalysts

Breast Health

Hologic’s to-be-reported quarter's results are expected to reflect benefits from the Breast Health segment. Within the business, growth of Breast Imaging and Interventional Breast Solutions sub-segments are expected to have aided the to-be-reported quarter’s performance.

Hologic, Inc. Price and EPS Surprise


Hologic, Inc. price-eps-surprise | Hologic, Inc. Quote

The segment is currently growing fast on the large installed base of market-leading, clinically differentiated Genius 3D mammography systems. Specifically, the company’s mammography systems and the continuation of positive momentum after the acquisitions of SuperSonic Imagine, Focal Therapeutics and Faxitron Biopticsto, are expected to have driven growth for the segment in the quarter under review.

For the past few months, Hologic’s 3Dimensions and 3D Performance systems has been contributing significantly to the top line. A new portfolio of products — including Intelligent 2D, Clarity HD, SmartCurve — has been witnessing strong market adoption. Also, the Faxitron business is expected to have aided the company’s top line in the fiscal fourth quarter. Aptima women's health test kits are expected to have maintained the previous quarter’s growth momentum as well.

Geographically speaking, domestic sales of the Breast Health segment have been quite impressive for the past few quarters, backed by product expansion. The company anticipates this trend to have continued in the fiscal fourth quarter as well.

The Zacks Consensus Estimate for the Breast Health segment’s revenues is pegged at $283 million, indicating rise of 4.8% from the prior-year quarter’s reported figure. The consensus estimate for the Interventional Breast Solutions segment’s revenues stands at $53 million, suggesting 4.3% dip from the year-earlier quarter’s reported number.

Other factors

The company expects its Diagnostics segment to have maintained a stellar performance in the fiscal fourth quarter on strength in the Molecular Diagnostics business. In the United States, it is likely to have gained from expanding market share and increasing utilization of the Panther system.

The company currently has more than 11 tests that were cleared by the FDA or marked by CE to run on Panther or the Panther Fusion platforms. The Molecular Diagnostics segment is expected to have witnessed global growth in the fiscal fourth quarter on its Panther system — the fully-automated molecular diagnostics instrument.

The Zacks Consensus Estimate for Molecular Diagnostics’ revenues is pegged at $171 million, suggesting a 0.1% increase from the year-ago quarter’s reported level.

This apart, Hologic has been witnessing an uptick in its Cytology sales for the past few quarters. In the fiscal fourth quarter, the company is expected to have benefited from MyoSure’s performance along with the introduction of products like Fluent Fluid Management System and Omni Hysteroscope last year.

The Zacks Consensus Estimate for Cytology’s revenues is pegged at $117 million, indicating a 2.7% decline from the year-ago quarter’s reported level.

Hologic’s results are expected to reflect gains from strong international performance as well as solid Molecular Diagnostics, Breast Health and Gyn Surgical businesses. In the Medical Aesthetics segment, the company witnessed a sales decline in the previous quarter.

However, U.S. sales force stabilization is anticipated to have positively impacted the company’s performance in the to-be-reported quarter.

The company expects a favorable foreign currency movement in the fiscal fourth quarter, resulting from the strengthening of the U.S. dollar, to have aided its performance.

The Zacks Consensus Estimate for the company’s earnings of 65 cents suggests 12.1% growth from the year-ago reported figure. The consensus mark for its revenues is pegged at $843.3 million, indicating 3.7% rise from the year-ago reported figure.

What the Model Suggests

Our proven model does not conclusively predict an earnings beat for Hologic this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat but that is not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Earnings ESP: Hologic has an Earnings ESP of -0.15%.

Zacks Rank: Hologic currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are a few medical stocks worth considering, as these have the right combination of elements to post an earnings beat this quarter.

Assembly Biosciences, Inc ASMB currently has an Earnings ESP of +20.43% and a Zacks Rank #1.

HCA Healthcare, Inc HCA presently has an Earnings ESP of +1.14% and a Zacks Rank #2.

Eyenovia, Inc EYEN currently has an Earnings ESP of +31.58% and a Zacks Rank #2.

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