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Hologic Inc Stock Downgraded (HOLX)

Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model.

NEW YORK ( TheStreet) -- Hologic (Nasdaq: HOLX) has been downgraded by TheStreet Ratings from buy to hold. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures and expanding profit margins. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income and weak operating cash flow.

  • EXCLUSIVE OFFER: Jim Cramer's Protégé, Dave Peltier, only buys Stocks Under $10 that he thinks could potentially double. See what he's trading today with a 14-day FREE pass.

Highlights from the ratings report include:

  • HOLX's revenue growth has slightly outpaced the industry average of 4.7%. Since the same quarter one year prior, revenues slightly increased by 4.2%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
  • Despite currently having a low debt-to-equity ratio of 0.51, it is higher than that of the industry average, inferring that management of debt levels may need to be evaluated further. Despite the fact that HOLX's debt-to-equity ratio is mixed in its results, the company's quick ratio of 2.23 is high and demonstrates strong liquidity.
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Health Care Equipment & Supplies industry. The net income has significantly decreased by 34.8% when compared to the same quarter one year ago, falling from $36.20 million to $23.59 million.
  • Net operating cash flow has decreased to $71.80 million or 40.13% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
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Hologic Inc. develops, manufactures, and supplies diagnostic, medical imaging systems, and surgical products for the healthcare needs of women. The company operates in four segments: Breast Health, Diagnostics, GYN Surgical, and Skeletal Health. The company has a P/E ratio of 169.5, above the S&P 500 P/E ratio of 17.7. Hologic has a market cap of $5.38 billion and is part of the health care sector and health services industry. Shares are up 16.2% year to date as of the close of trading on Friday.

You can view the full Hologic Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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