We have retained our Neutral recommendation on
DENTSPLY International Inc.
) with a price target of $42.
Its third-quarter 2012 adjusted earnings per share of 51 cents
inched past the Zacks Consensus Estimate of 50 cents per share
and exceeded the year-ago adjusted earnings of 46 cents (up
Revenues jumped 12.3% year over year to $695.7 million, driven
by acquisitions and strong internal sales in the U.S., Europe as
well as the Rest of World categories. However, revenues fell
short of the Zacks Consensus Estimate of $712 million.
Led by the prevailing macroeconomic scenario and the company's
performance, DENTSPLY expects to generate adjusted earnings per
share in the band of $2.19-$2.24 for 2012, compared with the
earlier band of $2.18-$2.24.
Based in Pennsylvania, DENTSPLY International is a global
leader in the design, development, manufacture and marketing of
dental consumables, dental laboratory products and dental
specialty products. Despite macroeconomic headwinds, it boasts
solid internal growth on the back of innovative new products and
consistent strong performance.
The company also has a strong international presence. Emerging
markets offer healthy growth opportunity on a long-term basis as
they remain vastly untapped.
Further, the acquisition of Astra Tech has reinforced the
company's leadership in the global dental market and broadened
its product portfolio. DENTSPLY is successfully integrating the
Moreover, the re-launch program of the orthodontics products
line is gathering momentum and we expect it to gain market share
and boost internal growth going forward.
However, an overall soft macro economy, especially a slow
global dental implants market, remains a potential downside for
DENTSPLY. Austerity measures in southern Europe due to
geopolitical uncertainty also remain a concern.
Although the company's domestic U.S. market has shown signs of
recovery lately, demand for dental products are slow mainly due
to the troubled U.S. labor market, currency fluctuation and the
upcoming Med-tech tax.
DENTSPLY operates in highly competitive markets and hence, we
remain cautious about the aggressive competition from players
Sirona Dental Systems
). We currently have a short-term Zacks #3 Rank (Hold) on
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