May 2, 2008
Knobias Clip Report (5-1-2008)
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Submitted By Knobias ClipReport
HOLX: Shares Plunge on Earnings Report
Thursday’s session saw oil dominate the headlines as Exxon Mobil (XOM) reported their earnings for the first quarter which displayed a revenue number of $116.85 billion. The number is almost astonishing. In comparison, Microsoft reported revenue of only $15 billion for their first quarter, and if they bought Yahoo!, the combined would only report revenue in the $16-17 billion area. That’s still a $100 billion shy of what Exxon raked in the past 3 months. Even if you add two Warren Buffets and throw in one in the Walton clan, just for good measure, and odds are, you’ll still come up short of Exxon sales for the next quarter.
But this is an apple to orange comparison. Technology and the net worth’s of the richest people on the face of the planet isn’t a fair litmus test. Even so, the idea that one company can make that much money is still astounding. And some of the media pundits calling for a redistribution of Exxon earnings are flirting with communist characteristics that are opposite of what this country was built upon.
But moving on, in the small cap space, another name reported earnings that had many take notice. Hologic Inc. (HOLX) is a diversified medical technologies company specializing in diagnostics, imaging systems and interventional devices dedicated to serving the healthcare needs of women.
The Company reported second quarter revenue totaling $431.0 million, a 138% increase when compared to revenues of $181.1 million in the second quarter of fiscal 2007. The increase was primarily attributable to the inclusion of approximately $189.2 million of revenues from the new product lines acquired in the merger with Cytyc Corporation on October 22, 2007. For the second quarter of fiscal 2008, Hologic reported net income of $56.0 million, or $0.22 per diluted share, compared with net income of $21.6 million, or $0.20 per diluted share, in the second quarter of fiscal 2007. Included in the second quarter of fiscal 2008 results were charges relating to the Cytyc merger of $25.1 million attributable to the amortization of intangibles and $0.8 million attributable to the increase in cost of revenues relating to the write-up of acquired inventory to fair market value.
Despite the growth, the numbers missed analyst expectations. Estimates called for earnings of $0.28 on $417.88 million in revenue. Following the 21% miss on the bottom line, shares plunged by almost the same amount. The stock ended at $23.75, off over 18.6% on the day.
The action caused multiple analysts to come to its defense. Jefferies noted that the sell off was overdone and reiterated its Buy rating. Citigroup noted that the weakness was a buying opportunity and they reiterated their Buy rating. Oppenheimer also came to the Company’s defense.
“This quarter marks our first full quarter since we completed our acquisition of Cytyc. We are pleased with our results and proud of our accomplishments to date — most notably, the alignment of our sales resources and our expanded product offerings,” said Jack Cumming, Chief Executive Officer in the earnings release. “We are beginning to see the sales synergies we had hoped for, especially in our Breast Health segment as the combined sales force has opened up a channel of opportunity for our interventional breast solutions business. Fiscal 2008 continues to look bright as we remain committed to our financial targets.”
With the healthcare industry growing at leaps and bounds because of an aging population, along with the Company’s synergistic efforts from the recent acquisition, the name could become one to follow over the coming months at these depressed prices. Investors would be wise to watch.
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