Hologic Earnings: Green Shoots From Base Business Emerge as COVID-19 Demand Declines

Though Hologic's fiscal second-quarter results were dominated by declines in COVID-19-related diagnostics that drove consolidated quarterly revenue decline of 28% in constant currency, double-digit growth in nonpandemic product lines was impressive, even after taking the soft prior-year period and the addition of two extra selling days. Nonetheless, the pressure from the loss of COVID-19 tests leaves Hologic on track to meet our full-year expectations and, as such, we're leaving our fair value estimate unchanged. The firm's credible efforts to innovate in surgical and breast health, as well as expand assays in diagnostics, underscores our favorable view of Hologic's narrow economic moat. We anticipate the firm will continue to enlarge its assay library over time, thereby leveraging the switching costs associated with its diagnostic platforms.