What's Behind Hologic's Positive Long-Term Outlook for Cytology Unit?

Hologic HOLX is a leading name in the cytology space, with its Cytology business, part of its Diagnostics franchise, primarily focusing on screening for cervical cancer. The company has pioneered the first FDA-approved liquid-based cytology test — the ThinPrep Pap test — and the first FDA-approved mRNA-based HPV test — the Aptima HPV Assay. Co-testing — combining a Pap test with an HPV test — is the most sensitive testing option for cervical cancer screening compared to either test used alone. While this business of Hologic has historically been a flattish to single-digit grower, the company has continued to invest in it, like the 2024 launch of the Genius digital cytology system.

It was a significant introduction, marking the only FDA-cleared digital cytology system that combines deep-learning-based AI with advanced volumetric imaging technology to help identify pre-cancerous lesions and cervical cancer cells. HOLX management noted that if not for the sales headwinds in China, Cytology would have grown in low single digits in the second quarter of fiscal 2025, driven by the rollout of its Genius digital diagnostics system, instead of reporting a 2.2% decline.

With more labs around the world implementing this in-house innovation, Hologic has received strong positive feedback. Genius replaces the traditional manual review of path slides, which was previously conducted on glass under a microscope, by capturing a digital image of the slide, which can be reviewed remotely from anywhere in the customer's network on the company’s review station. These workflow advantages not only address their growing labor shortages but also enable cervical cancer screening in regions with limited infrastructure. Because the Genius system requires an overhaul of the traditional pet screening workflow, Hologic expects the full rollout to be a multi-year process, serving as a growth driver for the next several quarters.

HOLX’s Peers in Cervical Cancer Screening

Quest Diagnostics DGX offers a complete menu of solutions for screening and diagnosing cervical cancer. In April this year, DGX introduced a new solution aimed at expanding access to human papillomavirus (HPV) screening to help identify women who are at risk of developing cervical cancer. With this new offering, physicians can offer patients the option to collect their specimen for HPV screening in a physician's office or other healthcare setting. Quest Diagnostics’ latest test uses the FDA-cleared HPV self-collection solution from Roche, approved for use with Roche Holding AG’s RHHBY cobas HPV test in May 2024.

Roche’s cervical cancer portfolio includes three clinically validated tests to help identify women at risk and improve the detection of high-grade disease in a single round of screening. The cobas HPV test is the first clinically validated, FDA-approved, CE-IVD marked HPV DNA test for all cervical screening indications — primary screening, ASC-US triage and co-testing. The CINtec PLUS Cytology test is the only FDA-approved triage test that uses dual biomarker technology to simultaneously detect p16 and Ki-67 in women with HPV-positive results. Roche’s CINtec Histology test uses advanced p16 biomarker technology to confirm cervical lesions due to transforming HPV infections.

HOLX Stock Performance, Valuation and Estimates

In the past six months, Hologic shares have risen 5.2% against the industry’s 11.9% fall.

Hologic is trading at a forward three-year price-to-earnings of 15.23X, lower than the industry average of 28.67X. The stock carries a Value Score of B at present.

Consensus estimates for Hologic’s fiscal 2025 earnings are showing a mixed trend.

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research