UPDATE: ISI Group Upgrades Hologic as Shares Approach a Tipping Point

In a report published Tuesday, ISI Group analyst Vijay Kumar upgraded the rating on

from Buy to Strong Buy, and raised the price target from $25.00 to $25.50. In the report, ISI Group noted, “Hologic's strategic decision to diversify its revenue base via acquisitions hasn't quite worked out, with poor capital returns and structural issues resulting in massive (~$5 Bn) capital destruction for long term shareholders. Shares have become increasingly volatile, with the Bears pointing to structural challenges in ThinPrep and Novasure, and reimbursement delays for 3D Tomo. The Bulls received a shot in the arm with the recent changes in management (new CEO, CFO off the Board, aligning management incentive to ROIC), against a backdrop of diagnostic share gains (highlighted by recent Quest Lab win) and upside from 3D Tomo in the longer term. We believe that HOLX is coming to a tipping point, with the Board looking to rectify a multi-year underperformance.” Hologic closed on Monday at $20.10.