Hologic to Buy Mobidiag for $795 Million; Morgan Stanley Says Acquisition Makes Sense
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.
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.
“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.”
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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