How Hologic Leverages Its Financial Firepower to Drive Long-Term Value

Hologic’s HOLX consistent profitability has led to strong cash flow generation, approximately $1 billion annually, supporting the development of a pristine balance sheet. The company’s capital deployment strategy prioritizes tuck-in acquisitions to access high-growth adjacent markets, followed by share repurchases, mainly to manage dilution and, if needed, to narrow the gap in double-digit earnings. In recent years, Hologic has allocated approximately $3.6 billion on share repurchases, including $200 million in the second quarter of fiscal 2025, and another $2 billion on M&A.Notable acquisitions include Biotheranostics in the Diagnostics division, Endomagnetics in Breast Health and, most recently, Gynesonics in Surgical. These businesses are growing faster than Hologic’s legacy units, and their integration into the portfolios is set to drive the company’s operating margins toward the corporate average. As of the second-quarter end, Hologic had $1.6 billion in cash and investments and a leverage position below 1X, holding ample financial capacity to continue both inorganic investments and buybacks.   All three acquisitions are expected to boost the company’s revenue growth rate. Biotheranostics is seeing increased lab testing volumes from the growing adoption of the Breast Cancer Index test, which helps assess the benefits of continued endocrine therapy. Endomagnetics is currently enjoying strong momentum, with its market-leading products and R&D capabilities highly complementing Hologic’s interventional breast portfolio. In the second quarter of fiscal 2025, Hologic started selling Endomagnetics products directly through its North American salesforce — a strategic action led by the company’s new leadership, positioning it to capture the significant market opportunity in wireless localization.Meanwhile, Gynesonics has expanded the Surgical portfolio with the Sonata System, a minimally invasive radio frequency ablation tool that treats uterine fibroids less accessible by MyoSure or Accesa. The addition is expected to amplify the strength of Hologic’s International Surgical business.Scenario for Hologic’s RivalsBecton, Dickinson and Company BDX, or BD, on its May 2025 earnings call, reported year-to-date free cash flows of approximately $625 million, impacted byplanned one-time cash payments. BD’s net leverage stood at 2.9X, in line with its expectations, and the company has already repurchased $750 million so far, with the goal of deploying $1 billion by year-end.Thermo Fisher Scientific TMO reported $370 million in free cash flow in the first quarter of 2025. Thermo Fisher returned $2.1 billion of capital to shareholders through $2 billion of share buybacks, completed in January, and approximately $150 million of dividends. Further, TMO announced plans to acquire Solventum's purification and filtration business for approximately $4.1 billion in cash. HOLX Stock Performance, Valuation and EstimatesIn the past three months, Hologic shares have risen 5.3% against the industry’s 8.6% fall.Image Source: Zacks Investment ResearchHologic sits at a favorable position relative to the industry with a forward two-year earnings multiple of 14.66X. The stock carries a Value Score of B at present.Image Source: Zacks Investment ResearchHere’s how consensus estimates for Hologic’s fiscal 2025 and 2026 earnings are shaping up.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.Only $1 to See All Zacks' Buys and SellsWe're not kidding.Several years ago, we shocked our members by offering them 30-day access to all our picks for the total sum of only $1. No obligation to spend another cent.Thousands have taken advantage of this opportunity. Thousands did not - they thought there must be a catch. Yes, we do have a reason. We want you to get acquainted with our portfolio services like Surprise Trader, Stocks Under $10, Technology Innovators,and more, that closed 256 positions with double- and triple-digit gains in 2024 alone.See Stocks Now >>Want 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 Becton, Dickinson and Company (BDX): Free Stock Analysis Report Thermo Fisher Scientific Inc. (TMO): 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