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Hologic Upgraded to Outperform by Cowen on Expected Coronavirus Test Demand

NEW YORK – Cowen on Tuesday upgraded Hologic's stock to Outperform from Market Perform and increased the share-price target to $64 from $55.

In a research note, Cowen analyst Chris Lin said that largely as a result of demand for COVID-19 testing, Hologic is on track to place about 500 Panther systems this year, about double its recent annual run rate. "While these placements are primarily driven by COVID-19 testing needs in the near term, we believe labs will continue to utilize these instruments once COVID-19 testing abates," Lin said.

Cowen's forecast for Hologic now assumes about 350 placements driven by SARS-CoV-2 testing alone by the end of the next influenza season, in the fiscal second quarter of 2021, which ends on March 31.

The investment bank estimates Hologic will generate more than $1.5 billion from SARS-CoV-2 test revenues through the end of fiscal 2021.

Cowen increased its fiscal year 2021 revenue and EPS estimates by more than 10 percent, and Lin said that long term the MDx business appears positioned to grow in the high-single digits.

Hologic has the capacity to manufacture more than 1 million SARS-CoV-2 tests per week, and its management expects that capacity to "meaningfully increase" by the fall of 2020, Lin said.

The US Food and Drug Administration granted Emergency Use Authorization for Hologic's Panther Fusion SARS-CoV-2 assay in March and for its Aptima SARS-CoV-2 assay running on the Panther system in May.

In Tuesday morning trading on the Nasdaq, Hologic shares were up slightly more than 5 percent at $56.