UPDATE: Citigroup Downgrades Hologic to Neutral, Reiterates $24 PT on More Balanced Risk/Reward Profile

In a report published Wednesday, Citigroup analyst Amit Bhalla downgraded the rating on Hologic HOLX from Buy to Neutral, but reiterated the $24.00 price target. In the report, Citigroup noted, “We are downgrading HOLX to Neutral (from Buy) as the stock price has significantly increased since the company's new CEO took over on July 18th (+13% vs. S&P up +1%), and while we do expect improved strategic focus from management, we believe the stock appropriately reflects new upcoming initiatives balanced against potentially muted F2014 financial performance. HOLX's F4Q earnings call (Nov 11th) will include F2014 guidance as well as highly anticipated commentary regarding the company's strategic review. While mgmt. has indicated that F2014 will only see flat/slight growth, the street is currently modeling growth of +3% in revs and +11% EPS which will likely need to be reduced. In addition, we believe the initial strategic review discussion will focus on capital allocation, internal restructuring, modest divestitures, but not a break-up of the company (given the prices paid for the original assets). As such, the recent move up in the stock now creates a more balanced risk/reward profile and we chose to move to the sidelines.” Hologic closed on Tuesday at $22.28.
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Posted In: Analyst ColorDowngradesAnalyst RatingsAmit BhallaCitigroup
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