Citi upgrades Hologic stock rating to Buy on valuation and growth outlook

Investing.com - Citi upgraded Hologic (NASDAQ:HOLX) from Neutral to Buy on Wednesday, raising its price target to $80.00 from $60.00, citing attractive valuation and improving business fundamentals. The medical technology company currently maintains a "GREAT" financial health score according to InvestingPro analysis.

The upgrade follows reports that Hologic rejected a roughly $16 billion takeover offer from a private equity consortium in May, which has sparked increased investor interest in the medical technology company.

Citi noted that Hologic’s stock currently trades at a discount to both its 5-year price-to-earnings average and its peer group, creating what the firm describes as "an attractive entry point for investors."

The firm expressed confidence in the recovery of Hologic’s Breast Health segment, which is expected to see improvement in gantry placements during the second half of fiscal 2025, ahead of a next-generation gantry launch next year.

Citi also highlighted that Hologic faces easier year-over-year comparisons in its Surgical and Skeletal Health businesses, which previously encountered headwinds from a stop-ship order and IV shortage, while tariff concerns—particularly regarding the company’s Costa Rica facility—are now "well understood" by the market.

In other recent news, Hologic Inc . reported second-quarter results that exceeded analyst expectations, with adjusted earnings per share of $1.03 and revenue of $1.01 billion, slightly surpassing forecasts. However, the company revised its full-year earnings guidance downward, now anticipating adjusted EPS between $4.15 and $4.25, below previous projections. Despite challenges, the diagnostics and skeletal segments showed strength, though breast health revenue declined by 7.4%.

In a significant development, private equity groups TPG and Blackstone (NYSE:BX) approached Hologic with a buyout offer exceeding $16 billion, although the company rejected the nonbinding proposal. This potential acquisition has drawn considerable attention, as it would represent one of the largest leveraged buyouts this year. Analyst firms have also been active, with Stephens lowering Hologic’s price target to $70 while maintaining an Overweight rating, and Mizuho (NYSE:MFG) and Jefferies both reducing their targets to $65, citing various financial pressures.

These analyst adjustments reflect ongoing challenges, including reduced revenue expectations from China and the impact of tariffs. As Hologic looks ahead, the company anticipates growth in its breast health segment in the fourth fiscal quarter of 2025, with further expansion expected from new product launches in 2026.

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