Needham downgrades Hologic ahead of COVID-19 testing decline

Needham analyst Mike Matson downgraded Hologic to Hold from Buy without a price target. The company is seeing a "massive benefit" from COVID-19 testing, but testing sales will begin to decline in 2021, Matson tells investors in a research note. While COVID will bring "sustainable benefits," investors are mostly ignoring Hologic's COVID-19 testing "windfall," and vaccine developments will further weigh on sentiment, says the analyst.

Matson thinks Hologic shares should be valued on the company's post-COVID-19 earnings power. His "best guess at this point" is that the company's post-COVID-19 earnings power per share is $3.68 in fiscal 2022. On this valuation Matson downgrades the shares to Hold.

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