Goldman Removes Hologic From Conviction Buy List, Maintains Buy

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Goldman Sachs’ Isaac Ro believes that with the early adoption curve for Hologic, Inc. HOLX's tomosynthesis product having played out, “the upside case will rest on the balance of the company’s portfolio,” where expectations are still low.

Ro maintained a Buy rating on Hologic, with a price target of $45, while removing the company from Goldman Sachs’ Americas Conviction Buy List.

The analyst pointed out that since the stock was added to the America’s Conviction Buy List in December 2014, it has appreciated 29 percent, as compared to the 3 percent rise in the S&P 500.

Positive Outlook

Ro also explained the Buy rating has been maintained due to the view that “(1) consensus underestimates the durability of HOLX’s franchise outside of Breast Health and (2) improving balance sheet flexibility will further augment HOLX’s core growth rate.”

The analyst pointed out that new products, including the Affirm biopsy and Panther Fusion, were likely to enhance Hologic’s organic growth rate in FY17, even as tomosynthesis adoption decelerates.

“Management has a stated desire to pursue tuck-in M&A, which we expect should drive additional upside in the coming quarters,” Ro added.

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Posted In: Analyst ColorLong IdeasReiterationAnalyst RatingsTrading IdeasGoldman SachsIsaac Ro
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