Diagnostics company Hologic (HOLX) got a bump on the stock market Friday on a new requirement to screen all donated blood in the U.S. for the Zika virus.
Hologic's screening assay Procleix, developed with Spanish partner Grifols (GRFS), won emergency FDA approval in June after cases of Zika infection started appearing in Puerto Rico. This month, it won a $4.1 million contract to aid in the development of the test. Roche's (RHHBY) Cobas assay also won HHS support back in April.
At the time, the FDA only required screening at blood centers in Puerto Rico and two counties in Florida, but now that the disease has spread the FDA advised that all blood centers in the U.S. and associated territories screen.
Evercore ISI analyst Vijay Kumar estimated that, after the 50/50 split with Grifols, the expanded screening could add $15 million in annual revenue and 2 cents to EPS.
"In light of heightened investor fears over organic revenue trajectory for fiscal 2017, we note that (with) today's FDA update along with recent decision by Cigna (CI) to reimburse 3D Tomo mammography, we feel comfortable with Hologic revenues coming in above the Street's 4% estimate," Kumar wrote in a research note.
Hologic stock rose 1% to 38.80 on the stock market today. Grifols stock fell 1% to 16.07.
IBD'S TAKE: Hologic is a solid stock with a Composite Rating of 90, putting it in the top 10% of all stocks. It's only ranked 11th in the Medical Systems group, however, because the group is so strong -- currently No. 12 out of 197 Industry Groups. See its Stock Checkup to find out which companies lead the group.
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