Hologic Inc. HOLX is slated to report first-quarter fiscal 2017 financial results on Feb 1, after the closing bell.
Last quarter, the company posted a positive earnings surprise of 4.00%. Notably, Hologic’s earnings surpassed the Zacks Consensus Estimate in all of the past four quarters, with an average beat of 6.05%.
Let’s see how things are shaping up prior to this announcement.
Factors at Play
Post its impressive fourth-quarter fiscal 2016 report, Hologic has been involved in a series of developmental strategies. The company entered into a global collaboration deal with Korea-based Seegene to develop high multiplex real-time reagents for its Panther Fusion system that is currently being developed. We believe that the tie-up will help broaden Hologic’s Panther Fusion system line of products and strengthen its position in the molecular diagnostic market in the forthcoming quarters.
Hologic Inc. Price and EPS Surprise
Hologic Inc. Price and EPS Surprise | Hologic Inc. Quote
The company has also announced the sale of its loss-making blood screening business to commercial partner, Grifols. The motive behind the divestiture is to drive sustainable growth by accelerating the top as well as the bottom line and boosting financial flexibility. This may also drive investors’ confidence in the stock.
Meanwhile, Hologic received several regulatory approvals for its Aptima Quant assay series to complement women’s health diagnostics. The company obtained Canadian Approval for Aptima Hepatitis C and B Quant Assays and also received CE mark for its Aptima HSV 1 & 2 assay. Recently, the FDA granted PMA approval for another of Hologic’s Aptima HIV-1 Quant viral load monitoring assays.
Coming to recent launches, the company introduced the next-generation NovaSure ADVANCED global endometrial ablation system to enhance the treatment of abnormal uterine bleeding. This should also boost the upcoming quarterly results.
On the flip side, even though Hologic has decided to vend its loss-making blood screening business, the transaction has not been completed. In the past quarter, the business faced a considerable decline due to lower blood utilization and fluctuating ordering patterns by its partner. We expect these weaknesses to persist in the yet-to-be-reported quarter, hampering the top line growth.
Besides, currency headwinds, escalating operating expenses and intense competition, particularly in the tomosynthesis market, continue to raise concern. Over the past few quarters, Hologic has witnessed several challenges such as restricted capital spending environment, economic uncertainties in Europe, slower sales cycles and increasing pricing pressure. We expect these problems to linger in the future as well.