The medical technology company Hologic, Inc. (HOLX - Get Rating) has started 2021 pretty well, reporting revenue growth across all major businesses and regions. Over the past year, the stock rallied nearly 55% to close yesterday’s trading session at $82.89, after hitting its 52-week high of $84.07. It is currently trading just 1.4% below its 52-week high.

Given the company’s impressive track record of sustainable growth and growing demand for its products, HOLX is expected to make new all-time highs. The company has been continuously expanding its market reach.

Let us take a closer look at why the stock could keep soaring:

Solid Growth Opportunities

While the healthcare space witnesses a steady demand, the need for advanced medical instruments and devices has been increasing at a faster pace with growing awareness among people. Being an established company in this space, HOLX is expected to gain significantly from the industry’s steady growth.

The company is also expanding its reach in the European market. On January 21, the company announced the availability of 3D ultrasound imaging on the SuperSonic MACH 30 and 20 ultrasound systems in Europe. On the same date, HOLX announced the launch of its new, CE-marked Fluent fluid management system on the continent.

Growing Revenues Across Major Businesses and Geographies

HOLX’s top line climbed 89.3% year-over-year to $1.61 billion for the first quarter of fiscal 2021 that ended December 26, 2020. Total diagnostics revenue increased 262.2% year-over-year to $1.13 billion. Revenue from the GYN Surgical segment increased more than 4% year-over-year to $124 million, while revenue from skeletal health increased 6% year-over-year to $24.9 million.

The US segment revenue increased 79.8% year-over-year to $1.14 billion, and international revenue increased 116.7% year-over-year to $472 million.

Strategic Partnerships and Acquisitions

On February 1, 2021, the company announced a multi-year strategic collaboration with Alphabet Inc.’s (GOOGL) Google Cloud that is expected to feature the integration of Google Cloud’s machine learning (ML) technologies with HOLX’s Genius Digital Diagnostics System. This is expected to transform the screening and accelerate the eradication of cervical cancer across the world.

In early January, the company announced that it has agreed to acquire Biotheranostics, Inc. Also, on January 4, HOLX announced that it has completed the acquisition of SOMATEX Medical Technologies GmbH.

Favorable Analyst Sentiment

Analysts have been upgrading their views on the stock based on an impressive earnings release. The stock has an average broker rating of 1.41, indicating a favorable analyst sentiment. Out of 13 Wall Street analysts that cover the stock, 7 rated it a Strong Buy and 5 rated it a Buy.

Moreover, Wall Street analysts expect the stock to reach $87.69 in the near term, which indicates a potential upside of 15.7%.

Our POWR Ratings Indicate Continued Strength

HOLX has an overall rating of A, which equates to Strong Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors with each factor weighted to an optimal degree.

Our proprietary ratings system also evaluates each stock on 8 different categories. Out of these categories, HOLX has a Growth Grade of A. Over the past three years, the company’s revenue and EPS grew at a CAGR of 13.3% and 11.7%, respectively.

Value investors also have reasons to rejoice as the stock has a Value Grade of A. This is in sync with the stock’s forward Price/Sales of 3.74x, which is lower than the industry average of 9.31x.

Moreover, HOLX also has a Momentum Grade of A which is consistent with the stock’s 20.4% return over the past three months and 13.8% gain over the past month.

Beyond the POWR Ratings grades I’ve just highlighted, you can see HOLX’s ratings for Stability, Sentiment, Quality and Industry here.

There are also several other stocks in the Medical – Devices & Equipment industry with an overall POWR Rating of A. Click here to see them.

Bottom Line

Given HOLX’s dominance in the medical device space, the stock is expected to soar in upcoming months. The company’s strategic collaborations and growing market reach should drive its growth in the near term which is why it could be wise to bet on the stock now.

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HOLX shares were trading at $83.43 per share on Tuesday morning, up $0.54 (+0.65%). Year-to-date, HOLX has gained 14.55%, versus a 2.31% rise in the benchmark S&P 500 index during the same period.

About the Author: Manisha Chatterjee

Since she was young, Manisha has had a strong interest in the stock market. She majored in Economics in college and has a passion for writing, which has led to her career as a research analyst. More...

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