On Sep 16, 2013, we maintained our long-term Neutral
Henry Schein Inc.
) following solid second-quarter 2013 results. This leading
global distributor of health care products and services carries a
Zacks Rank #3 (Hold).
ALIGN TECH INC (ALGN): Free Stock Analysis
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HENRY SCHEIN IN (HSIC): Free Stock Analysis
MWI VET SUPPLY (MWIV): Free Stock Analysis
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Why Still Neutral?
Henry Schein continues to record healthy quarterly performance.
In the second quarter, adjusted EPS rose 10.8% year over year to
$1.23, beating the Zacks Consensus Estimate by a penny. Revenues
increased 8.6% to $2.39 billion in the quarter, marginally ahead
of the Zacks Consensus Estimate of $2.38 billion.
The company continues to gain from its broad footprint in the
fast growing animal health market. The growth in its core dental
business also bolstered confidence. Henry Schein is well
positioned to further gain from its extensive global foothold and
diverse channel mix. It also stands to gain from attractive
market dynamics and favorable demographic trends. We believe that
Henry Schein's aggressive strategy of tuck-in acquisitions should
boost its growth profile.
Given the current growth trend, the company raised the lower end
of the guidance range for 2013. At present, Henry Schein
envisages adjusted EPS in the range of $4.86−$4.91, representing
growth of 9%−11% year over year, compared with prior guidance of
On the tepid side, the rising prominence of group purchasing
organizations (GPOs) has increased pricing pressure in the
industry. This might be a drag on Henry Schein's business in the
future. The contagion of global economic problems continues to
remain an overhang on the healthcare industry. While the dental
business continued to face pressure in selective international
markets, the animal health market growth rate across Europe
In addition, currency headwinds continue to downplay quarterly
results as seen in the 0.1% negative impact on top-line growth
from unfavorable currency movements in the reported quarter. The
company also faces tough competition in each business line.
Stocks that Warrant a Look
While we remain on the sidelines for Henry Schein, we are
The Cooper Companies Inc.
Align Technology Inc.
MWI Veterinary Supply, Inc.
) doing well. These stocks carry Zacks Rank #2 (Buy).