Does Hologic’s Expanding Diagnostics Portfolio Make the Current Share Price Look Attractive?

• Investors may be wondering whether Hologic at around $74.94 is quietly turning into good value, or if it is just treading water while other healthcare names run ahead of it.
• Over the last year the stock is up about 4.6%, with a modest 4.5% gain year to date, while short-term moves have been fairly muted, down 0.1% over the last week and up 1.0% over the last month.
• Recent headlines have focused on Hologic expanding its portfolio of diagnostic and women’s health technologies and deepening partnerships with healthcare providers. This helps frame why investors may be slowly warming to the story. At the same time, ongoing attention on structural demand for screening and diagnostic tools keeps the stock on the radar for long-term, growth-oriented investors.
• Right now Hologic scores a 4 out of 6 on our valuation checks, suggesting some signs of undervaluation that are worth unpacking in detail via our valuation score. Next we will walk through the main valuation approaches before finishing with a more holistic way of thinking about what the stock may be worth.

Hologic delivered 4.6% returns over the last year. See how this stacks up to the rest of the Medical Equipment industry.

Approach 1: Hologic Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a company is worth by projecting its future cash flows and discounting them back to today in $ terms. For Hologic, the model starts with last twelve month Free Cash Flow of about $905.8 million and then applies analyst forecasts for the next few years, before Simply Wall St extrapolates further cash flows out to 10 years.

In this model, Free Cash Flow is projected to reach around $1.16 billion by 2028 and to continue growing through 2035, reflecting modest but consistent expansion of the business. Using a 2 Stage Free Cash Flow to Equity approach, these future cash flows are discounted back to arrive at an estimated intrinsic value of roughly $105.62 per share.

When compared with the recent share price of about $74.94, the DCF estimate implies that Hologic is trading at a 29.0% discount to its calculated fair value. This indicates that the market price is below the valuation suggested by the model.

Result: UNDERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Hologic is undervalued by 29.0%. Track this in your watchlist or portfolio, or discover 918 more undervalued stocks based on cash flows.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Hologic.

Approach 2: Hologic Price vs Earnings

For a profitable company like Hologic, the Price to Earnings ratio is a practical way to gauge valuation because it links what investors are paying directly to the profits the business is generating today. In general, faster growing and less risky companies can justify a higher PE ratio, while slower growth or higher uncertainty usually warrants a lower one.

Hologic currently trades on a PE of about 29.5x, which is slightly below the Medical Equipment industry average of roughly 30.6x and well below the broader peer group average of around 54.3x. To move beyond simple comparisons, Simply Wall St also calculates a Fair Ratio, which is the PE multiple it would expect for Hologic given its earnings growth outlook, profitability, industry positioning, market cap and risk profile. This tailored Fair Ratio for Hologic is about 28.0x, making it more informative than a blunt comparison to industry or peer averages, which do not adjust for company specific strengths and risks.

Comparing the current PE of 29.5x with the Fair Ratio of 28.0x suggests the shares are trading somewhat above this modelled fair level.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Hologic Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives. These are simply the stories investors tell about a company. They back up their view of fair value with their own assumptions for future revenue, earnings and margins, and then turn that story into a concrete forecast and a fair value estimate that can be compared with today’s price to guide buy or sell decisions.

On Simply Wall St’s Community page, millions of investors use Narratives as an easy, accessible tool to connect what they believe about a business with numbers on a chart. Those Narratives update dynamically as fresh information such as news, earnings or deal terms comes in.

For Hologic, for example, one investor might build a more optimistic Narrative that leans toward the upper end of recent targets and sees fair value closer to about $94 per share. A more cautious investor could anchor their Narrative near the lower end, closer to $65. Both can clearly see how their different assumptions drive different fair values relative to the current price.

Do you think there's more to the story for Hologic? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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