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Hologic Provides Upbeat 1Q Sales Outlook, $1B Share Buyback Plan; Shares Gain

Hologic announced better-than-expected preliminary revenue results for 1Q. Additionally, the medical technology company introduced a new $1 billion share repurchase program. Shares closed 3.2% higher on Friday.

Hologic (HOLX), which is scheduled to report its 1Q results on January 27, expects quarterly total revenues to increase 89.3% to nearly $1.61 billion year-on-year, compared with analysts’ estimates of $1.38 billion. It is also higher than its previous guidance of $1.35-$1.425 billion.

Hologic said that its top-line benefited from strong testing volumes related to the COVID-19 pandemic. The company provided over 30 million COVID-19 tests globally during the quarter.

Driven by strong sales, Hologic now projects its 1Q adjusted EPS to be significantly higher than its earlier guidance range of $2.10-$2.25 provided on Nov. 4, 2020. (See HOLX stock analysis on TipRanks)

Furthermore, the company’s board of directors approved a new five-year share buyback plan worth $1 billion. Hologic bought back approximately 1.5 million of its common stock for $101 million in 1Q.

Following the 1Q preliminary results announcement, Needham analyst Michael Matson reiterated a Hold rating on the stock. In a note to investors, Matson wrote, “We expect HOLX’s Diagnostics growth to peak in F2Q21 before the vaccine roll-out combined with warmer spring weather cause COVID-19 infections to start to decline. HOLX starts to face very tough comps in F4Q21, and we expect its revenue growth to slow and potentially even turn negative.”

The consensus among analysts is a Moderate Buy with 8 analysts assigning a Buy rating and 3 suggesting a Hold rating. With shares up 53.9% over the past year, the average price target of $90.11 implies upside potential of another 12% over the next 12 months.

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