Should You Continue to Hold Hologic Stock Post Q4 Earnings?

Hologic HOLX will soon draw an end to its publicly traded phase, following an $18.3 billion agreement with U.S. private equity giants Blackstone and TPG. The buyout price consists of $76 per share in cash plus a non-tradable contingent value right (CVR) worth up to $3 per share. Meanwhile, the company’s fiscal 2025 fourth quarter results, released on Nov. 3, reflected solid progress toward returning to better top- and bottom-line growth. Revenue increased 6.2% to $1.05 billion, while adjusted earnings per share (EPS) of $1.13 climbed 11.9%. Performance was driven by the continued rebound of the Breast Health business and also supported by contributions from other segments.  

Given the pending transaction, management refrained from providing any guidance for fiscal 2026. Meanwhile, Hologic recently had a major regulatory win. Its Genius Digital Diagnostics System has achieved expanded CE marking in the European Union, now approved to image and review both cell and tissue specimens. Previously, it was CE marked specifically for cell analysis, mainly used in cervical cancer screening, among other applications, and also received FDA clearance for diagnostic use in January 2024.

HOLX Stock Price Performance

In the past six months, Hologic stock has risen 31.4%, surpassing its industry, the broader Medical sector and the S&P 500 composite’s growth. The company also outperformed key rivals like Abbott ABT, whose shares declined 4.1%, while QIAGEN N.V. QGEN gained 3.1% in the same period.

HOLX 6-Month Price Comparison

From a technical standpoint, the stock has been trading above the 90-day simple moving average (SMA) for a while, signalling a bullish trend.  

Hologic's Technical Indicator

Q4 Tailwinds for Hologic

Breast Health Rebounds: After a stretch of softer performance, the Breast Health segment generated $393.7 million in revenues, up 4.8% year over year.  This was aided by strong sales of interventional products, the inclusion of Endomagnetics and continued improvement in U.S. sales execution. Organic breast health revenues — which excludes sales from the divested SSI business and the July sales from the Endomagnetics business — increased 3.3%. Hologic’s new leadership team spent the year taking actions that laid the foundation for long-term growth, including reorganizing the sales team between capital and disposable product sales reps and rolling out the end-of-life strategy for older gantries.

Surgical Momentum Continues: Hologic previously forecasted the fourth quarter to be the strongest quarter of revenue growth for the year, benefiting from an easier comp and better commercial execution. GYN revenues grew 10.2% year over year to $172.5 million, driven by increased sales of MyoSure and Fluent. Hologic’s investments in commercial and market access capabilities outside the United States have significantly expanded the reach of its minimally invasive surgical products. Gynesonics, a tuck-in acquisition that complements the fibroid treatment portfolio, also contributed to performance. Excluding sales from Gynesonics, organic surgical revenues rose 5.3%.

Strength in Molecular Diagnostics: Fiscal fourth-quarter Molecular Diagnostics revenues increased 1.2%, driven primarily by higher sales of the BV CV/TV and Panther Fusion assays. Hologic is strongly acting on its vast U.S. vaginitis market opportunity by driving awareness and securing reimbursement for this high-throughput test. Panther Fusion has continued to see strong traction throughout fiscal 2025, with its open-access functionality giving labs the flexibility to run their own lab-developed tests on the Fusion platform. In addition, Hologic received 510(k) clearance for the Panther Fusion Gastrointestinal Bacterial and Expanded Bacterial Assays. 

Hologic’s Innovation Prowess

Hologic continues to win competitively through steady product innovations. Its Genius Digital Diagnostics System combines a new artificial intelligence (AI) with advanced volumetric imaging technology to help cytologists and pathologists identify pre-cancerous lesions and cervical cancer cells. The workflow advantages not only address their growing labor shortages customers face but also enable cervical cancer screening in areas of the world where infrastructure is limited. With the latest expanded CE marking, the Genius system will allow European labs to unify digital workflows with one comprehensive solution and support pathologists in their work, diagnosing a variety of cancers and other diseases.

Hologic’s Genius AI Detection PRO is essentially an all-in-one AI assistant for the radiologist. The solution offers advanced cancer detection by analyzing prior exams and an AI assistant with automated reporting and other workflow features, and overall reading time up to 24%. In addition, in fiscal 2026, the company will commercially launch the highly anticipated Envision Mammography Platform, which offers patients a high-speed Hologic 3D mammogram with an industry-leading 2.5-second scan time.

Hologic Stock Appears Undervalued

Based on the forward five-year Price-to-Earnings (P/E) ratio, Hologic shares are trading at 16.28, lower than their median and the 29.91 industry average. The stock carries a Value Score of B at present. In contrast, QGEN and ABT have a five-year P/E of 17.97 and 23.30, respectively. 

Hologic Five-Year P/E

What Concerns HOLX?

Outside the United States, the Diagnostics business has been constrained by the ongoing geopolitical turmoil, including the USAID funding challenges in Africa and the challenging operating environment in China. Tariffs also remain a concern, which may continue to adversely impact the cost and sale of its products in certain countries, or increase the costs it may incur to purchase materials, parts and equipment from suppliers. Based on the last update, Hologic expected to incur $10 million to $12 million in tariffs per quarter in fiscal 2026, translating to approximately 100 basis points of headwind to the gross margin.

End Note on HOLX Stock

Hologic has successfully achieved the Breast Health turnaround exiting fiscal 2025 while sustaining strength across all other divisions. New and upcoming innovations continue to generate strong market excitement and carry the potential to become future growth drivers. With its solid six-month performance and attractive valuation, the Zacks Rank #3 (Hold) stock appears to be a good option to retain in the portfolio until it starts its new chapter. Based on yesterday’s closing price of $74.14, the deal represents a potential return of 6.5% to existing investors following the closure of the buyout. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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

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