Can Breast Health Growth Aid Hologic (HOLX) In Q3 Earnings?

Hologic, Inc. (NASDAQ:HOLX) is slated to report third-quarter fiscal 2019 results on Jul 31, after the closing bell. In the last reported quarter, the company reported a positive earnings surprise of 1.8%. Its earnings surpassed the Zacks Consensus Estimate in three of the last four quarters, the average beat being 1.4%.

Let's see how things are shaping up prior to this announcement.

Key Catalysts

Breast Health

Hologic anticipates its to-be-reported quarter's results to benefit from the Breast Health segment. Within this business, growth of the Breast Imaging and Interventional Breast Solutions sub-segments are expected to contribute to the to-be-reported quarter’s results.

This segment is currently growing fast on large installed base of market-leading, clinically differentiated Genius 3D mammography systems. Specifically, the company’s recently-launched mammography systems and the acquisition of two small companies, namely Focal Therapeutics and Faxitron Biopticsto, are expected to have driven growth for this segment in the quarter under review.

Lately, the company’s 3Dimensions and 3D Performance systems have been contributing significantly to the top line. A new portfolio of products — including Intelligent 2D, Clarity HD, SmartCurve, Brevera biopsy system, and Affirm prone biopsy system — have been witnessing strong market adoption.

All the aforementioned developments are expected to reflect on the Breast Health segment’s top line in the fiscal third quarter.

The Zacks Consensus Estimate for the Breast Health segment’s revenues is pegged at $328 million, indicating rise of 6.5% from the prior-year quarter’s reported figure. The consensus estimate for the Interventional Breast Solutions segment’s revenues stands at $58 million, suggesting 13.7% rise from the year-earlier quarter’s reported number.

Other factors

The company expects its Diagnostics segment to have maintained a stellar performance in the fiscal third quarter on strength in the Molecular Diagnostics business. In the United States, it is likely to have gained from its expanding market share and increasing utilization of its Panther system.

Global growth in the Molecular Diagnostics segment in the fiscal third quarter can be attributed to Hologic's Panther system — the fully-automated molecular diagnostics instrument. The company currently has more than 15 tests that have been cleared by the FDA or marked by CE to run on the Panther or the Panther Fusion platforms.

This apart, Hologic has been witnessing an uptick in its cytology sales. In this regard, the company is expected to have benefited from the recent FDA clearance for ThinPrep Genesis Imager.

The Zacks Consensus Estimate for Molecular Diagnostics’ revenues of $164 million implies a 5.8% improvement from the year-ago quarter’s reported level.

We are upbeat about Hologic’s international performance as well and expect solid contributions from Molecular Diagnostics, Breast Health and Gyn Surgical businesses.

On the flip side, the company is facing challenges like unfavorable foreign currency movements over the last few quarters. Escalating operating expenses and intense competition, particularly in the tomosynthesis market, are creating headwinds for Hologic.

The Zacks Consensus Estimate for the company’s earnings of 61 cents suggests 5.2% growth from the year-ago reported figure. The consensus mark for its revenues is pegged at $834.6 million, indicating 1.3% rise from the year-ago figure.

What the Model Suggests

The proven Zacks model predicts that a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chances of beating estimates if it also has a positive Earnings ESP.

Hologic currently has a Zacks Rank #2 and an Earnings ESP of +1.49%. This combination hints at the company’s prospects to beat on earnings this season. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering, as these too have the right combination of elements to post an earnings beat this quarter.

AmerisourceBergen (NYSE:ABC) currently has an Earnings ESP of +0.82% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

DENTSPLY SIRONA (NASDAQ:XRAY) presently has an Earnings ESP of +6.95% and a Zacks Rank #1.

Amedisys, Inc. (NASDAQ:AMED) currently has an Earnings ESP of +1.91% and a Zacks Rank #1.

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