ATML Earnings Action

Hologic Inc. (HOLX), a leading developer, manufacturer and supplier of premium diagnostics products and medical imaging systems for women, is a sleeper medical technology company that’s slipped off the radar, but should be on a list of mid-cap plays to watch as the new trading year begins. Down from much loftier price levels, the stock has become reasonably priced, trading at $12.68 or 10.3x 2009 expected earnings of between $1.22 to $1.24 per share on revenue of $1.83 billion to $1.85 billion, and is in good financial shape with strong positive cash flow of $75 million a quarter expected throughout the next year. Expectations have become much more manageable and that creates the opportunity for real upside to the story with Hologic’s strong product pipeline because current guidance for the full year does not assume any contribution from U.S. sales of three products currently awaiting FDA pre-market approval (PMA) – Selenia Dimensions Tomosynthesis, CerVista HPV, and Adiana. Those are positive catalysts with potential approvals looming in the first half of calendar 2009. Based on the November conference call, management expects most to be accretive within a quarter or two following approval and should be helpful in driving future revenue and earnings growth. That could be just the right prescription to inject some momentum in shares of Hologic.