Please ensure Javascript is enabled for purposes of website accessibility

Hologic (HOLX)

This medical device company beat analysts’ forecasts by a penny last quarter, and three analysts have increased their earnings estimates in the past 30 days.

Hologic (HOLX)
From Canaccord Genuity Research

We conducted our second proprietary 3D tomo survey, our first since February 2015, and interviewed 5 radiologists. Our survey data suggests that Hologic (HOLX) has expanded its leading market share position and is well-positioned to continue converting customers from 2D to 3D tomosynthesis.

Our interviews with docs were largely positive, as a large pool of 2D instrument units (~60-70%) have not yet been converted to 3D. Docs opined that greater commercial reimbursement for 3D tomo represents another catalyst to help drive growth. On the other hand, we were surprised to see that nearly three-fourths of institutions have started converting to 3D, a faster adoption curve than we expected.

We continue to believe that Hologic remains the best-positioned company to lead the ongoing, steady conversion to 3D tomo. 72% of docs use Hologic today, up 10% points vs. our prior survey 6 quarters ago. 20% use of GE, down 10 points vs. our prior survey. Siemens and Philips came in at only 2 points apiece and “other” had 4 points. Fewer patient recalls and improved cancer detection were key advantages cited; higher cost and commercial payor reimbursement were the challenges. Customer satisfaction was 88% (scores of 10, 9 or 8, out of 10).

To date, HOLX has stated that 3D Tomo penetration represented ~33% of its install base, ~20% of the market as a whole, and expects 3D Tomo to continue to accelerate until it likely peaks sometime in 2017. We peg HOLX’s 3D tomo install base at ~2,400 systems (17%converted) with a total of ~8,600 systems globally, or ~59% share.

We think the FQ3/16 (reporting on 7/27) setup looks achievable though we wouldn’t be surprised to see another out-quarter guide come in light of the Street. We expect FQ3/16 revs of $701M (+1% y/y, off a +9% prior year comp. We look for Adj. EPS of $0.47. Over the last 3 quarters, HOLX has averaged a +1.1% positive surprise to revs and +4.6% surprise to Adj. EPS, or +$0.02 beat. We expect FQ4 revs of $720M (+2.5%) and Adj. EPS of $0.49.

Mark Massaro and Mary Kate Gorman, Canaccord Genuity Research,, 617-371- 3711, July 13, 2016