Medical technology company Hologic Inc. has announced the acquisition of privately-held Biotheranostics Inc. in a deal worth $230 million. Shares of Hologic, which closed 4% higher on Tuesday, have gained 46.5% over the past 12 months.
Hologic (HOLX) said that Biotheranostics provides molecular diagnostic tests for cancer, and therefore, the deal would help the company expand its presence in the fast-growing oncology market.
The deal is likely to close in February and is likely to be dilutive to its adjusted EPS in FY21. However, the company expects it to be accretive beyond FY22.
Kevin Thornal, president of Hologic’s diagnostics division said, “Acquiring Biotheranostics enables us to jump-start our entry into a large, fast-growing oncology adjacency that fits perfectly with our broader corporate focus and passion for women’s health.” (See HOLX stock analysis on TipRanks)
Following the deal, Needham analyst Michael Matson said, “HOLX is a leader in the infectious disease testing market and we believe the Biotheranostics acquisition allows HOLX to expand into the adjacent oncology market.” The analyst added, “Given the financial windfall that has resulted from HOLX’s COVID-19 test sales, we expect HOLX to remain active with M&A in CY21.”
Notably, Hologic has recently acquired Somatex Medical Technologies for approximately $64 million. However, Matson still maintained a Hold rating on the stock, as he believes that, “HOLX shares are fairly valued considering its post-COVID-19 earnings power.”
Currently, the Street is cautiously optimistic about the stock, with a Moderate Buy analyst consensus based on 8 Buys and 3 Holds. Meanwhile, the average price target stands at $90.11, which indicates upside potential of 18.5%.
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