Can Hologic Lean on Its Strengths in a Tough Macroeconomic Climate?

Marlborough, MA-based Hologic HOLX is navigating a shifting geopolitical landscape in each of its core businesses. In a conservative move, the company’s fiscal 2025 sales outlook now excludes the HIV testing business in Africa, which used to generate $50 million in revenues annually, following the halt in USAID funding. Hologic also cut its revenue forecast for China to nearly $50 million for the year due to heightened tariff pressure, growing anti-American sentiment and strong local competition for its cytology products.

Compounding this, tariffs related to manufacturing activities in Costa Rica and China are projected to raise quarterly inventory acquisition costs by nearly $20 million to $25 million, straining its profitability.

Still, the company remains confident in delivering solid financial results. Its cost-effective infectious disease and cancer tests support early detection and help reduce the overall healthcare costs, putting Hologic in a favorable spot in this macro environment. The Molecular diagnostics business is expected to remain a standout due to the strong demand for the BV/CV vaginitis assay and Biotheranostics’ Breast Cancer Index test. Further, the Panther platform’s existing installed base, growing utilization and menu are likely to continue to fuel the strong momentum in the Diagnostics segment.

The company’s Breast Health products offer a strong foundation. However, the service business — which grew 12% year over year in the fiscal 2025 second quarter — is relatively larger and growing faster than capital sales. Recent actions such as reorganizing the sales team and structure and enhancing the processes are already yielding favorable results for Hologic.

How Are Hologic’s Peers Holding Up?

Despite a cautious customer spending environment and evolving global trade dynamics, QIAGEN QGEN has shown resilience. 2025 started on a solid note for the sample-to-solutions provider, with both first-quarter sales and adjusted EPS surpassing its outlook. QIAGEN reaffirmed approximately 4% constant exchange rate (CER) annual growth in its core portfolio. Meanwhile, QIAGEN’s 8% forecasted CER growth for the bottom line is supported by operational margin expansion while accounting for the current tariff environment.

Medtronic MDT ended fiscal 2025 on a high note, supported by its growth drivers. For fiscal 2026, it projects a net tariff impact of approximately $200 million to $350 million on its cost of goods sold. Excluding the impact of tariffs, Medtronic expects approximately 4% EPS growth for the year. While underlying business fundamentals remain strong, Medtronic is actively working to overcome external factors while promising to return to high single-digit EPS growth in fiscal 2027.

HOLX Stock Price Performance

Over the past year, Hologic shares have dropped 10.1% compared with the industry’s decline of 13.9%.

Hologic’s Valuation

From a valuation standpoint, HOLX trades at a forward 12-month price-to-sales (P/S) of 3.44X, lower than its median of 3.99X, as well as the 4.11X industry average of 4.11X. It carries a Value Score of B.

HOLX Stock Consensus Estimate Trend

Take a look at how the Zacks Consensus Estimate for HOLX’s earnings has been revised over the past 90 days.

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.

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

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