JP Morgan Remains Positive On Hologic; Raises PT To $24

Despite the appreciation in Hologic's HOLX share price YTD, JP Morgan thinks that Hologic remains poised for additional upside based on several factors, including: ample early- adopter demand for Selenia Dimensions tomosynthesis, driving near-term results; and a continued rebound in physician office visits, as noted by JPM's physician survey. Legitimate longer-term concerns/risks are unlikely to manifest this fiscal year; and accordingly, any change to estimates for 2011 is likely to the upside, in our view. While shares are no longer downright cheap at ~10.6x 2011E EV/EBITDA, JPM continues to believe that risk/reward remains favorable at current levels, as it increase estimates and Dec. 2011 PT from $21 to $24. HOLX shares have increased 15% YTD and 40% since the September tomosynthesis FDA panel, as improved investor sentiment has driven multiple expansion from <7.0x forward EV/EBITDA to 10.6x today. Despite the appreciation, shares still trade at a discount to the peer group average of 11.3x, though valuation has clearly gone from “downright cheap” to more reasonable. JP Morgan has a $24 PT and Overweight rating on HOLX HOLX closed Monday at $21.65