【is revanced safe】Morgan Stanley Downgrades Hologic On Tough Cynosure Recovery, Surgery Business Risks
Although
Hologic,is revanced safe Inc.
(NASDAQ:
HOLX
) acquired
Cynosure
to achieve a higher weighted average market growth rate, Cynosure's main businesses have not delivered as expected, according to Morgan Stanley.
The Analyst
Morgan Stanley’s David Lewis downgraded
Hologic
from
Equal-weight to Underweight
and cut the price target from $44 to $39.
The Thesis
Hologic diversified into aesthetics with its purchase of Cynosure, with expectations of generating higher WAMGR, Lewis said in the Wednesday downgrade note.
Yet MonaLisa Touch and SculpSure — which drove almost all of Cynosure’s growth prior to the acquisition — have not returned to their pre-acquisition levels, the analyst said.
The body sculpting channel is showing signs of saturation, and the company's women’s health strategy appears flawed given the FDA’s latest scrutiny of vaginal rejuvenation, Lewis said.
Competition for NovaSure will intensify if Channel Medsystem’s Cerene snags FDA approval in mid-2019, he said.
Hologic operates in slower growth end markets versus its peers and has a WAMGR of around 3.5 percent, which is significantly below that the competition's 5 percent, the analyst said.
“A structural 3-percent organic and 8-percent EPS growth profile is below peers at 5-6 percent organic and double-digit earnings growth, which suggests Hologic is likely to relatively underperform peers."
Price Action
Hologic shares were trading down 6.45 percent at $38.45 at the time of publication Wednesday.
Related Links:
Hologic Downgraded By BofA As Cynosure Headwinds Persist
Hologic: Meet Goldman Sach's New 'Conviction Buy'
Photo courtesy of Hologic.
Latest Ratings for HOLX
Jan 2019
Morgan Stanley
Downgrades
Equal-Weight
Underweight
Nov 2018
RBC Capital
Maintains
Sector Perform
Sector Perform
Oct 2018
Morgan Stanley
Maintains
Equal-Weight
Equal-Weight
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