Morningstar | Hologic Sees Strong Fiscal First Quarter and Our Fair Value Estimate Is Unchanged
Narrow-moat Hologic kicked off its fiscal year with strong first-quarter results that had management adjusting its outlook for the full year upward. However, we’re holding steady on our fair value estimate, as we’ve seen little to materially shift our expectations of Hologic’s product lines, which leaves our estimates within in the range of management’s revised outlook. Hologic’s breast imaging unit posted roughly 11% quarterly growth, adjusted for the addition of Faxitron. This was somewhat better than we’d expected, fueled by upgrades and accessories. While we don’t think this kind of double-digit growth can be sustained over the longer haul, we remain confident that Hologic can deliver more consistent long-term single-digit growth in the 3% to 5% range through this kind of life cycle management.We were pleased to see molecular diagnostics grow at 11% in constant currency year over year. While we recognize the first quarter in the prior year was notably weaker than usual, making for an easy comparison, we think the new Open Access feature that adds the PCR function to the Panther franchise likely adds topspin to growth. We believe Hologic should see favorable reception for this feature, as these more complex molecular diagnostic tests have generally fared better on reimbursement pressure as PAMA has squeezed the more common and commoditized routine diagnostic tests.
The legacy Cynosure medical aesthetics business remains the big soft spot for Hologic as it endeavors to rebuild its commercial organization to support those products. That challenge has been exacerbated by moves by the FDA to exercise more stringent oversight over application of certain devices. We think the collection and presentation of clinical data to satisfy the FDA could take some time to assemble.
Hologic is a developer, manufacturer and supplier of diagnostics products, medical imaging systems, surgical products and light-based aesthetic and medical treatment systems. The company's segments are: Diagnostics, which provides diagnostic products which are used to aid in the diagnosis of human diseases; Breast Health, which provides solutions for breast cancer care for radiology, pathology and surgery; Medical Aesthetics, which provides aesthetic treatment systems, including SculpSure, PicoSure and MonaLisa Touch; GYN Surgical, which includes NovaSure Endometrial Ablation System to treat abnormal uterine bleeding; and Skeletal Health, which includes the Horizon DXA, a dual energy x-ray system.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
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