Hologic Faces Molecular Drag, But Here's Why It's Not a Major Concern

Hologic’s HOLX Molecular Diagnostics business posted a 7.8% (excluding COVID-19-related sales) growth in the second quarter of fiscal 2025, although results did not reflect its full potential.The performance was impacted by lower HIV testing sales in Africa due to significant funding cuts to USAID programs by the new administration. This $50 million annual revenue stream is now being conservatively excluded from the full fiscal outlook. Management noted that without this setback, molecular revenues would have grown at a low double-digit rate in the second quarter.Even so, the long-term trajectory of the segment remains strong. Molecular Diagnostics continues to be the principal growth driver within Hologic’s Diagnostics division, with more than 20 assays running on the Panther and Panther Fusion platforms. The company is focused on driving more utilization of its existing menu, such as the test for Mycoplasma Genitalium (MGen), a prevalent but under-screened sexually transmitted disease (STD). Hologic’s revenue growth strategy rests on using both lab-sales force and physician-sales force to team up with lab customers, promote screening guidelines and drive test adoption.Newer innovations, like the BV/CV/TV assay, have meaningfully contributed to growth and still offer room for more expansion. Vaginitis affects nearly 20 million women annually in the United States, yet fewer than 40% are tested. Hologic is addressing this gap by driving awareness and securing reimbursement for this high-throughput test, solidifying its position in this space. Another key asset is Biotheranostics, which Hologic acquired in 2021 to enter the fast-growing oncology adjacency. Biotheranostics’ unique Breast Cancer Index test continues to see higher adoption, helping determine the benefits of extended endocrine therapy.Our model projects bullish growth for Hologic’s Molecular Diagnostics arm, which is likely to expand at a compound annual growth rate (CAGR) of 7.3% during the 2025-2027 period.The Case for Hologic’s RivalsRoche’s RHHBY infectious disease business was also affected by the USAID funding pause for testing, causing a decline of 5% in the first quarter of 2025. Still, without this effect, Roche’s Molecular Lab grew more than 6%. The company remains optimistic about the funding pause ending and a rebound in this business. This year, Roche is set to launch the cobas BV/CV assay in CE mark countries for use on the cobas 5800/6800/8800 platforms.Abbott ABT is also exposed to the far-reaching implications of the USAID funding halt, which has disrupted the supply chain for essential medical products in underserved countries. Performance-wise, Abbott’s Diagnostics business revenues dropped 5% in the first quarter of 2025 due to weak COVID-19 testing sales. The impact of volume-based procurement programs in China led to low single-digit growth in ABT’s Core Laboratory Diagnostics.HOLX Stock Performance, Valuation and EstimatesIn the last 30 days, Hologic shares have risen 3.6% compared to the industry’s 0.7% fall.Image Source: Zacks Investment ResearchHologic is trading at a forward five-year sales multiple of 3.44X compared to the industry average of 4.11X. The stock carries a Value Score of B at present.Image Source: Zacks Investment ResearchConsensus estimates for Hologic’s fiscal 2025 and 2026 earnings are showing a downward trend.Image Source: Zacks Investment ResearchHOLX stock currently carries a Zacks Rank #4 (Sell).You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Zacks' Research Chief Names "Stock Most Likely to Double"Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abbott Laboratories (ABT): Free Stock Analysis Report Roche Holding AG (RHHBY): Free Stock Analysis Report Hologic, Inc. (HOLX): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks