Henry Schein Inc.
's (HSIC) distribution business received a boost on the back of a
distribution deal inked with leading consumer goods company -
The Procter & Gamble Company
). Per the agreement, Henry Schein Animal Health - the U.S.
animal health division of Henry Schein - will act as the
exclusive distributor of P&G's Iams therapeutic diet formulas
of dog and cat food solutions in the contiguous
U.S. However, the financial terms of this agreement has not
Henry Schein continues to grain traction in its distribution
business which spans across the globe with 67 distribution
centers. Apart from North America and Europe, it has footprints
in Australia and New Zealand, as well as emerging nations like
China. The company is currently trying to enter Poland, the sixth
largest economy in the European Union. Earlier this month, Henry
Schein completed the acquisition of four distributors serving
dentists and dental laboratories in France, the Netherlands and
Belgium from Arseus NV.
Last November, the company had announced its plan to purchase
an 80% stake in privately-held Medivet S.A., a leading
distributor of animal health products and services in Poland.
Prior to that in Oct 2013, the company had announced its
expansion into South Africa with the acquisition of a minority
ownership position in The Dental Warehouse, a leading distributor
of dental consumable merchandise in the country.
Henry Schein is well positioned to gain from its extensive
global foothold and diverse channel mix. Favorable market
dynamics is a major growth catalyst going forward. We believe
high-growth avenues like the animal health market should improve
Henry Schein's growth profile. We are encouraged to find that in
spite of the austerity measures in Europe, Henry Schein continues
to garner market share in the Dental segment. Moreover, the
recent strategic acquisitions and partnerships along with plans
to expand global footprint are expected to act as major growth
However, the European economy and macroeconomic uncertainty
remain as major overhangs. Further, intense competition and
currency headwinds warrant caution. Moreover, as group purchasing
organizations (GPO) gain prominence, pricing pressure is
inevitable in the near term.
The stock currently carries a Zacks Rank #3 (Hold). Some of
the better-placed medical stocks worth considering are
Align Technology Inc.
Becton, Dickinson and Company
Cardinal Health, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
ALIGN TECH INC (ALGN): Free Stock Analysis
BECTON DICKINSO (BDX): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
PROCTER & GAMBL (PG): Free Stock Analysis
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