Hologic Shares Up on News That Federal Reimbursements for Mammographies Seen Remaining Stable

BEDFORD, Mass. -- Shares of Hologic surged Thursday after investors reacted to the federal government's move to leave mammography reimbursement levels mostly unchanged.

Mammography imaging equipment is a key market for the medical imaging device maker, comprising 49 percent of the company's revenue in its last fiscal year. The company's stock has been trading lower recently over concerns that the Centers for Medicare & Medicaid Services would cut reimbursements for digital mammography, according to an analyst report.

Shares of the company were up $6.56, or 15.9 percent, at $47.85 in afternoon trading on the Nasdaq at more than five times their daily volume. Shares hit a 52-week high of $56.71 April 7 and are down 27 percent since then.

Jefferies & Co. analyst Ryan A. Rauch, who reaffirmed a "Buy" rating with a price target of $62, said the government's methodology for physician fees, released Wednesday, were not substantially changed, despite Street expectations that they would be.

Reimbursements for the most common test actually increased by 1 percent.

"At these (trading) levels, we believe there is considerable upside to our estimates (on Hologic)," he wrote in a note to investors.

Final regulations for the reimbursement schedules will be announced in October.