Hologic delivered a better top line, driving a $0.04 beat relative to the Street. Overall revenues came in 2.4 percent better, with GYN Surgical again the most notable area of strength. Hologic's gross margin increased 50bps year-over-year to 65.7 percent.
"All in, we reiterate our Equal Weight rating as we balance opportunities across the portfolio against more challenging comps the next few quarters," analyst Jack Meehan wrote in a note.
In addition, the analyst highlighted that despite tougher challenging comps, the U.S. mammography business continues to show momentum in placement rates, which remains a core tenant of a bull thesis on Hologic.
Moreover, the diagnostics business continues to see stable progress across most segments buoyed by the Panther system.
Of note, the analyst emphasized that Hologic showed margin leverage from better revenues and continued to accelerate sales and marketing expenditures as it continues to invest in the 3D mammography campaign and diagnostic marketing.
Further, the company repurchased $101 million of shares and authorized a new $500 million buyback.
"Now levered at 2.97x net debt to TTM EBITDA, the company certainly has more flexibility to begin re-deploying free cash flow back to shareholders," Meehan continued.
At the time of writing, shares of Hologic rose 2.37 percent to $38.08, while Meehan has target price of $42.
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