Hologic Juggles Waning COVID-19 Assay Demand While Setting Up for Long-Term Growth in Second Quarter

Hologic reported fiscal second-quarter results that featured revenue declining 7% year over year, which was less severe than we’d been expecting thanks to the omicron surge that bolstered demand for COVID-19 assays again. However, we’re holding steady on our fair value estimate, as this quarter’s outperformance on the top line was generally offset by margin erosion thanks to test mix and a resumption in sales and marketing spending. We remain confident in the firm’s narrow economic moat, especially now that it has significantly expanded its installed base of Panther platforms, which sets the stage for an ongoing stream of assay revenue.