Analyst Note| Debbie S. Wang |
Hologic posted fiscal fourth-quarter results that highlighted the firm’s ability to balance declines in COVID-19 tests with acceleration of its nonpandemic business. Following some minor adjustments to our 2023 assumptions, we’re leaving our fair value estimate unchanged. We give management much credit for its skillful navigation of both the COVID-19 opportunity in 2020-21 and the diminishing demand in 2022. Importantly, we think the firm’s investment of its COVID-19 windfall in expanding its test menu should put Hologic on a path toward faster diagnostic growth than seen before the pandemic. All of this underscores our confidence in Hologic’s narrow economic moat, and we expect to see the firm further leverage the switching costs that are associated with its diagnostic platforms.