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Vivek Kumar
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Hologic, a global leader in women’s health, said on Thursday that it will acquire the fast-growing Finnish French biotechnology company Mobidiag Oy for about $795 million, including a cash payment of nearly $714 million for Mobidiag’s equity, and net debt of about $81 million.

The acquisition is expected to close early in the fourth quarter of fiscal 2021.

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In 20202, Mobidiag generated nearly $42 million of revenue. Hologic expected to invest in assay development to drive the growth of the Novodiag platform. As a result, the acquisition is expected to be about $0.10 dilutive to Hologic’s non-GAAP earnings per share in fiscal 2022, slightly dilutive in 2023, and accretive thereafter, the company said in the press release.

Hologic’s shares, which surged about 40% in 2020, rose just over 1% to $73.58 so far this year.

Analyst Comments

“Mobidiag was not inexpensive, but the asset offers an entry point into the rapidly growing acute-care segment and is very consistent with Hologic’s strategy to expand MDx throughout and beyond the COVID-19 pandemic,” noted David Lewis, equity analyst at Morgan Stanley.

Hologic has developed two molecular diagnostic tests for COVID-19 which are driving significant financial contribution. The company’s 3-4% end-market growth rates likely limit long-term growth potential to an extent, but COVID-19 Dx cash flow could allow material reinvestment or tuck-ins to shift underlying growth higher. We see increased M&A activity as a requirement to shift the WAGMR higher and drive the multiple.”

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Hologic Stock Price Forecast

Seven analysts who offered stock ratings for Hologic in the last three months forecast the average price in 12 months of $96.00 with a high forecast of $110.00 and a low forecast of $91.00.

The average price target represents a 30.47% increase from the last price of $73.58. Of those seven analysts, six rated “Buy”, one rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $84 with a high of $96 under a bull scenario and $56 under the worst-case scenario. The firm gave an “Equal-weight” rating on the medical technology company’s stock.

Several other analysts have also updated their stock outlook. Hologic had its target price boosted by Jefferies to $110 from $106. Jefferies Financial Group currently has a buy rating. Robert W. Baird upped their price target to $91 from $84 and gave the stock a buy rating.

Moreover, Zacks Investment Research downgraded Hologic to a hold rating from a buy and set a $79 price target on the stock. Argus upped their price target to $100 from $85.

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