Hologic Rides COVID-19 Testing Wave; Raising Our Fair Value

Thanks to the pandemic, Hologic delivered an astounding fiscal first quarter that featured organic growth of 104% year over year, driven by molecular diagnostics. We’re modestly raising our fair value estimate after adjusting our expectations for this strength to continue through this calendar year followed by softening in 2022 and 2023 as herd immunity is achieved globally. If the new viral variants from Brazil or South Africa become widespread, or if further obstacles crop up to slow vaccinations, we might adjust our expectations for demand to last into 2022. We give narrow-moat Hologic kudos for increasing its production capacity of the Panther platform machines, as well as the consumable SARS-CoV-2 tests. Seeing this display of operational excellence gives us more confidence that Hologic is well equipped to integrate the various acquisitions it has made of late to beef up its product portfolio.