Evercore ISI Upgrades Hologic (HOLX) to Buy

Evercore ISI upgraded Hologic (NASDAQ: HOLX) from Hold to Buy with a price target of $42.00 (from $38.00).

Analyst Vijay Kumar highlighted:

Increased confidence in MSD topline + DD EPS trajectory and valuation disparity vs. peers causes us to move to Buy

• After holding a Buy rating on HOLX for 3 years, we moved to the sidelines almost 1-year ago to the day (July 15, 2015) as we viewed HOLX shares had baked in the turnaround optimism at ~20x forward P/E
• YTD HOLX shares are down ~4% while MedTech peers are up 15-25%, and HOLX shares are trading at 2-5x discount to peers on a forward P/E basis as investor concerns around growth trajectory weighed in on shares
• We believe ST fears of a 3D Tomo cliff are overblown, and 3Q highlighted HOLX’s balanced portfolio’s ability to deliver MSD revenues (and high teens EPS) despite soft Breast Health revenues
• We contend that HOLX will be able to deliver double digit EPS growth in the medium term, and with shares yielding ~6% free cash yield at 16.5x CY16 P/E, we see a mean reversion trade heading into year end, causing us to upgrade shares to BUY
• Our PT of $42.00 equates to ~19x CY17 P/E and ~6% free cash yield, and offers ~12% upside to current levels

For an analyst ratings summary and ratings history on Hologic click here. For more ratings news on Hologic click here.

Shares of Hologic closed at $37.20 yesterday.

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