On Jun 17, we retained
DENTSPLY International Inc.
) at Neutral following its first-quarter results. Although the
first-quarter results were not impressive, we are confident that
the company's strong business fundamentals should boost overall
CONMED CORP (CNMD): Free Stock Analysis
COOPER COS (COO): Free Stock Analysis Report
WEST PHARM SVC (WST): Free Stock Analysis
DENTSPLY INTL (XRAY): Free Stock Analysis
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Why the Retention?
On May 9, DENTSPLY posted first-quarter 2013 adjusted earnings
per share of 52 cents (flat year over year), which missed the
Zacks Consensus Estimate of 56 cents. Revenues grew 2.2% year
over year to $732.1 million, marginally missing the Zacks
Consensus Estimate of $733 million. Year-over-year growth was
backed by healthy internal sales across all regions.
DENTSPLY's earnings have also managed to beat the Zacks Consensus
Estimate in three out of the last four quarters with an average
surprise of 1.85%. Over the past 60 days, the Zacks Consensus
Estimate has moved down by 2.1% to $2.37 for 2013 and 2.6% to
$2.61 for 2014.
DENTSPLY's diversified product range and significant investments
in product innovation should help it expand its share in the
dental market. Debt level continues to decrease and the company
plans to invest in accretive acquisitions as well as leverage
investor returns in 2013. Additionally, the company has gained
back significant market share in the orthodontic space but
henceforth it might be difficult to capture further share.
Although the Astra Tech acquisition has bolstered DENTSPLY's
footprint in the dental implants market, we are concerned over
integration-related glitches, which are affecting the company's
margins. The company has raised prices across the board to offset
the impact of the medical device excise tax.
However, the weak dental market condition offers only modest
growth prospects. Austerity measures in southern Europe due to
geopolitical uncertainty led management to lower its full-year
2013 guidance. We remain on the sidelines given the lack of
Other Stocks to Consider
Other medical stocks, which are expected to do well include
The Cooper Companies
). All these stocks carry a Zacks Rank #2 (Buy).