Hologic’s 18% Drop and Strong Cash Flow Spark New Valuation Debate for 2025

So you’re looking at Hologic and wondering if there’s still a good reason to stick around, or maybe even to make a move while others hesitate. Over the past year, Hologic’s share price has tumbled 18.2%, and things haven’t been much sunnier this year with a 6.6% dip year to date. Even the past week saw a minor 2% slide, though investors enjoyed a 5% pop over the last month. This serves as a reminder that market sentiment can shift just as quickly as lab results in Hologic’s core diagnostic business. With developments in healthcare technology and shifting investor appetites for medical device names, it is no surprise the stock has been on a bit of a rollercoaster lately.

But here is where it gets really interesting: Hologic currently scores 5 out of a possible 6 on our valuation checklist, meaning it appears undervalued on almost every key measure. That is not something you come across every day, especially for a company that has shown resilience over three- and five-year periods, delivering 7.8% and 1.7% returns respectively. The key question for smart investors now is whether this discounted price actually signals opportunity or if there is more digging to do.

Let’s break down how Hologic stacks up through different valuation approaches, and by the end, you will see why there might be an even more powerful lens for understanding where its true value lies.

Why Hologic is lagging behind its peers

Approach 1: Hologic Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model estimates what Hologic is worth today based on projections of the company’s future cash flows, discounted to reflect present value. Essentially, it is a way of taking all the cash Hologic is expected to generate in the coming years and determining what that is truly worth now.

Currently, Hologic’s Free Cash Flow stands at $918.8 Million. Analyst estimates project steady growth, with Free Cash Flow expected to reach $1.16 Billion by 2028. The model draws on both analyst forecasts (up to five years out) and further extrapolations beyond 2028, suggesting continued upward momentum. This makes the DCF approach particularly useful for companies like Hologic that have demonstrable cash generation over time.

Based on these cash flow projections, the DCF analysis calculates a fair value for Hologic stock at $108.72 per share, which is a notable 38.4% above its current share price. This intrinsic discount signals the stock is undervalued in the market according to this approach, despite the recent volatility and sector headwinds.

Result: UNDERVALUED

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

Our Discounted Cash Flow (DCF) analysis suggests Hologic is undervalued by 38.4%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Hologic Price vs Earnings

For profitable companies like Hologic, the Price-to-Earnings (PE) ratio remains a time-tested benchmark for assessing value because it ties a company’s price directly to its actual bottom-line performance. The “right” PE ratio, however, is not set in stone, as it fluctuates based on how quickly a company is expected to grow and the level of risk investors associate with its future cash flows. Higher growth and stability generally justify a higher PE, while riskier prospects or slowing growth warrant a lower one.

At present, Hologic trades at a PE ratio of 26.7x. If we measure this against the Medical Equipment industry average of 29.2x and the average of its peers at 35.4x, Hologic seems relatively modestly valued in its space. But pure comparisons like these can be misleading since every company has a unique mix of growth, profit margins, industry dynamics, and risk factors.

This is where Simply Wall St’s proprietary "Fair Ratio" comes in. The Fair Ratio, at 28.1x for Hologic, reflects a more nuanced valuation by factoring in growth rates, profit margins, industry trends, company size, and specific risks better than a straight industry average or peer comparison can. When we put Hologic’s current PE of 26.7x alongside its Fair Ratio of 28.1x, the difference is small. This suggests the market is pricing Hologic about right relative to its fundamental prospects and risk-adjusted growth profile.

Result: ABOUT RIGHT

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Hologic Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your view of a company's future, letting you tell a story behind the numbers. In other words, you can add your own forecasts for Hologic's revenue growth, profit margins, and fair value based on what you believe will drive its success or pose risks.

Narratives connect the company's core story to your specific financial expectations, creating a bridge from “why” you believe in Hologic to “what” that means for its fair value. On Simply Wall St’s Community page, Narratives are an easy tool available to everyone, making it straightforward for investors of any level to build or view reasoned perspectives, compare fair value to current prices, and decide when to act.

Because Narratives update automatically with new data, like earnings releases or news events, your investment thesis can stay current with the market. For example, one investor might believe in accelerated international growth and innovation, assigning Hologic a bullish fair value of $94 per share. Another might emphasize ongoing risks and set a more cautious fair value at $65. Narratives make such viewpoints simple, transparent, and actionable for all investors.

Do you think there's more to the story for Hologic? Create your own Narrative to let the Community know!

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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