While the S&P 500 is up 34.7% since April 2025, Hologic (currently trading at $67.73 per share) has lagged behind, posting a return of 15.9%. This might have investors contemplating their next move.

Is there a buying opportunity in Hologic, or does it present a risk to your portfolio? Check out our in-depth research report to see what our analysts have to say, it’s free for active Edge members.

Why Is Hologic Not Exciting?

We're cautious about Hologic. Here are three reasons there are better opportunities than HOLX and a stock we'd rather own.

1. Constant Currency Revenue Hits a Standstill

In addition to reported revenue, constant currency revenue is a useful data point for analyzing Medical Devices & Supplies - Imaging, Diagnostics companies. This metric excludes currency movements, which are outside of Hologic’s control and are not indicative of underlying demand.

Over the last two years, Hologic failed to grow its constant currency revenue. This performance was underwhelming and implies there may be increasing competition or market saturation. It also suggests Hologic might have to lower prices or invest in product improvements to accelerate growth, factors that can hinder near-term profitability.

2. Shrinking Adjusted Operating Margin

Adjusted operating margin is an important measure of profitability as it shows the portion of revenue left after accounting for all core expenses – everything from the cost of goods sold to advertising and wages. It’s also useful for comparing profitability across companies because it excludes non-recurring expenses, interest on debt, and taxes.

Looking at the trend in its profitability, Hologic’s adjusted operating margin decreased by 23.6 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability. Its adjusted operating margin for the trailing 12 months was 29.9%.

3. New Investments Fail to Bear Fruit as ROIC Declines

A company’s ROIC, or return on invested capital, shows how much operating profit it makes compared to the money it has raised (debt and equity).

We like to invest in businesses with high returns, but the trend in a company’s ROIC is what often surprises the market and moves the stock price. Unfortunately, Hologic’s ROIC has decreased significantly over the last few years. We like what management has done in the past, but its declining returns are perhaps a symptom of fewer profitable growth opportunities.

Final Judgment

Hologic’s business quality ultimately falls short of our standards. With its shares underperforming the market lately, the stock trades at 15.4× forward P/E (or $67.73 per share). While this valuation is fair, the upside isn’t great compared to the potential downside. We're pretty confident there are superior stocks to buy right now. We’d recommend looking at one of our top software and edge computing picks.

Stocks We Like More Than Hologic

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