U.S. Markets closed

HOLX vs DXCM: Which MedTech Stock is a Better Investment Pick?

Zacks Equity Research

Medical instrument companies Hologic, Inc. HOLX and DexCom, Inc. DXCM are solid contenders in the U.S. MedTech space, which is expected to reach a worth of $409.5 billion by 2023 at a CAGR of 4.5%. Analysts believe that 2019 will prove profitable for U.S. medical device companies, courtesy of the 2.3% Medical Device tax abatement along with focus on AI and cybersecurity.

Meanwhile, it is difficult to make a choice between the above-mentioned companies as both carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

However, we make a detailed analysis of the companies’ fundamentals to determine which has a slight edge over the other.

Massachusetts-based Hologic develops, manufactures, and supplies diagnostics, medical imaging systems and surgical products which cater to the healthcare needs of women. The company is focused on building mammography systems for breast examination and osteoporosis assessment. Meanwhile, California-based DexComis a medical device company focused on the design, development and commercialization of continuous glucose monitoring systems (CGM).

Price Performance

Over the past year, Hologic’s shares have gained 19.8% compared with DexCom’s 123.5% rally. The Medical Instruments industry has rallied 2.7% in the same time frame. Meanwhile, the S&P 500 index has declined 1.3%.

 

Which Way Are Estimates Headed?

The Zacks Consensus Estimate for Hologic’s current-year earnings per share stands at $2.41, suggesting an improvement of 8.1% year over year. The same for DexCom is projected at 46 cents, showing year-over-year growth of 53.3%.

Hologic, Inc. Price and Consensus

 

Hologic, Inc. Price and Consensus | Hologic, Inc. Quote

The Zacks Consensus Estimate for Hologic’s current-year revenues is pegged at $3.32 billion, suggesting growth of 3.2% from the previous year. The same for DexCom is pegged at $1.21 billion, reflecting a rise of 17.5%.

DexCom, Inc. Price and Consensus

 

DexCom, Inc. Price and Consensus | DexCom, Inc. Quote

What’s Favoring the Stocks?

Hologic currently has a Growth Score of C. Meanwhile, DexCom has a Growth Score of A. This reflects possibilities of outperformance over the long haul. Our research shows that stocks with a Growth Score of A or B, when combined with a Zacks Rank #1 or 2, are better picks than most.

DexCom's FDA-cleared CGM system — the DexCom G4 Platinum — is significantly boosting the company’s top line. Moreover, the company continues to focus on international markets, Germany in particular. The company is eyeing the sizeable markets of Korea, India, China and Japan as well.

Over the past four years, Hologic’s revenues have seen a CAGR of 19% to $3.22 billion. Meanwhile, DexCom’s revenues have seen a CAGR of 156.7% to $1.03 billion.

Wrapping Up

The above analysis shows that despite being close contenders, DexCom scores higher than Hologic when it comes to growth projections and fundamentals.

Key Picks

A few other top-ranked stocks in the broader medical space are Veeva Systems Inc VEEV and Integer Holdings Corporation ITGR.

Veeva Systems’ long-term earnings growth rate is projected at 14.8%. The stock flaunts a Zacks Rank #2.

Integer Holdings projects earnings growth rate of 31.2% for the first quarter. It currently carries a Zacks Rank #2.

Zacks' Top 10 Stocks for 2019

In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?

Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.

See Latest Stocks Today >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Veeva Systems Inc. (VEEV) : Free Stock Analysis Report
 
Hologic, Inc. (HOLX) : Free Stock Analysis Report
 
Integer Holdings Corporation (ITGR) : Free Stock Analysis Report
 
DexCom, Inc. (DXCM) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research