Dentsply Reiterated at Neutral - Analyst Blog

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On Sep 10, we retained DENTSPLY International Inc. ( XRAY ) at Neutral, following its second quarter of 2013 results. Although the mixed second-quarter results were not impressive, we are confident that the company's strong business fundamentals should boost overall growth, going forward.

Why the Retention?

On Aug 1, DENTSPLY's 2013-second-quarter adjusted earnings per share rose 6.5% to 66 cents, which beat the Zacks Consensus Estimate of 65 cents by 1.54%. However, revenues were roughly flat at $761.0 million, missing the Zacks Consensus Estimate by a whopping $25 million. Although revenues are improving steadily in the U.S., disappointing sales in Europe dampened its growth in the reported quarter.

DENTSPLY's earnings have managed to beat the Zacks Consensus Estimate in three out of the last four quarters, missing the mark in the first quarter of 2013, with an average negative surprise of 0.45%. However, following the earnings release, the Zacks Consensus Estimates for 2013 and 2014 remain unchanged at $2.35 and $2.58, respectively. As a result, the stock has a Zacks Rank #3 (Hold).

XRAY's diversified product range and significant investments in product innovation should eventually help it to expand its share in the dental market. Its debt level continues to decrease and XRAY plans to invest in accretive acquisitions as well as leverage investor returns in the near-term.

On a positive note, the Astra Tech integration is progressing in the right direction and is helping the company to save costs, which in turn is boosting operating margins. Additionally, the company has gained back significant market share in the orthodontic space, but henceforth, it might be difficult to capture further share.

However, the weak dental market condition offers only modest growth prospects. Austerity measures in southern Europe due to geopolitical uncertainty and fluctuations in currency movement led management to lower its full-year 2013 guidance. We remain on the sidelines until we see clear signs of top line growth.

Other Stocks to Consider

Medical stocks that warrant a look are Align Technology ( ALGN ), The Cooper Companies Inc. ( COO ), and MWI Veterinary Supply ( MWIV ). All these stocks carry a Zacks Rank #2 (Buy).



ALIGN TECH INC (ALGN): Free Stock Analysis Report

COOPER COS (COO): Free Stock Analysis Report

MWI VET SUPPLY (MWIV): Free Stock Analysis Report

DENTSPLY INTL (XRAY): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: ALGN , COO , MWIV , XRAY

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