HOLX - Embedded Expectations Analysis - 2021 03 26
Hologic, Inc. (HOLX:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with an 11.5x Uniform P/E. At these levels, the market is pricing in bearish expectations for the firm, and management may have concerns about their organic revenue growth targets, recent acquisitions, and the sustainability of COVID testing demandSpecifically, may lack confidence in their ability to sustain strong global sales performance, meet their organic revenue growth targets, and grow simultaneously across their three largest segments. Furthermore, they may have concerns about seasonal headwinds, pricing and reimbursement trends, and their acquisitions of Acessa, Somatex, and Biotheranostics. Additionally, management may lack confidence in their ability to continue to build more capacity and take advantage of their newly established relationships with European governments. Finally, they may be exaggerating the sustainability of COVID testing demand, the convenience of the Panther system, and the breadth of their installed base
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.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
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