Mizuho downgrades Hologic stock to Neutral following acquisition deal

Investing.com - Mizuho downgraded Hologic (NASDAQ:HOLX) from Outperform to Neutral and raised its price target to $78.00 from $70.00 following the company’s acquisition announcement. The medical technology company, which generates annual revenue of $4.04 billion with an impressive 61% gross margin, has maintained strong financial fundamentals with a "GREAT" health score according to InvestingPro metrics.

The rating change comes after Blackstone and TPG revealed earlier this week their agreement to acquire Hologic for $79 per share, representing an $18.3 billion enterprise value. The deal structure includes $76 in upfront cash and a potential Contingent Value Right (CVR) worth up to $3 per share.

The CVR component is tied to Breast Health revenue targets over the next two fiscal years, with potential payouts ranging from $0.50 to $1.50 based on performance slightly ahead of current Street estimates for FY26-FY27.

Mizuho considers the $79 offer price "fair," noting it values Hologic at approximately 16.5-17.5 times earnings, which aligns with the company’s 5-year historical average and is comparable to or slightly higher than its closest peers.

The firm sees minimal antitrust regulatory review risk and considers there to be little probability of a competing bid from another consortium or strategic buyer emerging.

In other recent news, Hologic has entered into a definitive agreement to be acquired by funds managed by Blackstone and TPG, with the transaction valued at up to $18.3 billion. This acquisition agreement led JPMorgan to downgrade Hologic’s stock rating from Overweight to Neutral, adjusting the price target to $78.00. Evercore ISI, however, upgraded Hologic’s stock to Outperform, anticipating growth despite previous challenges, such as reduced revenue from the Chinese market and U.S. AID funding cuts. Needham maintained a Hold rating on Hologic stock, highlighting the upcoming launch of the Envision mammography system in fiscal year 2026. Additionally, Minicarm.com has secured an allocation of Hologic’s Fluoroscan Insight FD Mini C-Arm systems for resale, as Hologic winds down commercial activities for this product line. These developments reflect significant strategic moves and market expectations surrounding Hologic.

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