Hologic stock price bounced back: What nest for HOLX?

Hologic (NASDAQ: HOLX) stock price has staged a strong recovery in November after the company pointed to post-Covid-19 growth. The shares jumped to a high of $72.95, which was modestly higher than the year-to-date low of $64. It remains about 18% below the highest point this year.

Return to growth continues

Hologic is a major American company valued at over $16 billion. The company focuses on devices for women’s health that provide diagnostics, medical imaging, and surgical products. It operates in four key segments, including diagnostics, breast health, GYN surgical, and skeletal health. 

Hologic’s business boomed during the Covid-19 pandemic as it offered popular testing solutions. In the aftermath, Hologic’s revenue rose from over $3.36 billion in 2019 to over $5.61 billion in 2021. Its revenue then dropped to $4.86 billion and $4.03 billion in the next two years.

Hologic stock price has now recovered modestly after its results revealed that the company is returning to growth. Total revenue rose by 16.7% in the third quarter to over $945 million. Its earnings per share rose to 89 cents. 

A look further showed that its diagnostics revenue dropped by 20.6% to $416 million because of its Covid business. Excluding that business, the division had a revenue growth of 10.2%. 

Its breast health revenue rose by 27.4% to $352.8 million while its surgical revenue rose by 15.8% to $148 million. These results show that the company is doing well as it embraces the new normal of weak Covid revenue growth. 

The management also expects the growth to continue. It sees its revenue growing by between $960 million and $985 million. For the year, it expects revenue to be between $3.92 billion and $4.02 billion.

These results mean that Hologic is fairly valued. It has a trailing PE multiple of 38.58 and a forward PE ratio of 21. Its forward PEG multiple is 1.02. The PEG ratio is an important multiple that incorporates the company’s earnings growth. 

Hologic stock price forecast

HOLX chart by TradingView

The daily chart shows that the HOLX share price formed a double-top pattern between February and April of this year. In price action analysis, this pattern is one of the most bearish signs in the market. It recently crashed below the important support at $76.47, the lowest point on March 17th.

Hologic stock price has remained between the 50-day and 100-day Exponential Moving Averages. It has also attempted to form an inverse head and shoulders pattern, which is a bullish sign.

Therefore, the outlook for the stock is bullish for now. If this happens, the next key level to watch will be at $76.47, the lowest point on March 17th. This view will be validated if the price moves above November’s high of $73. The alternative situation is where it resumes the downtrend and retests the October low of $64.

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