On Jun 11, 2014, we issued an updated research report on
Henry Schein Inc.
), a leading distributor of health care products and services
across the globe. Despite being plagued by challenging economic
conditions, a competitive environment and currency headwinds, Henry
Schein managed to post solid first-quarter 2014 results with both
its top and bottom line steering ahead of the respective Zacks
Year-over-year growth at both fronts is also indicative of the
company's consistent growth via organic and inorganic means. We
are, at the same time, encouraged by the global performance of the
company during the first quarter. The stock currently carries a
Zacks Rank #3 (Hold).
Henry Schein's adjusted EPS of $1.18 in the first quarter of
2014 increased 11.3% year over year and beat the Zacks Consensus
Estimate by 4.4%. Revenues rose 6.1% to $2.43 billion, edging past
the Zacks Consensus Estimate of $2.42 billion.
Henry Schein's revenue growth has been consistently supported by
niche buyouts. Evidently, the company has been on an acquisition
spree over the recent past. Its acquisition strategy helps it to
pursue targets that provide access to additional product lines.
In the quarter, Henry Schein forayed into the Brazilian dental
market with a 50% ownership investment in Dental Speed Graph. This
investment not only marks Henry Schein's entry into Brazil, but
also represents the company's first operation in South America.
With this recent ownership stake, Henry Schein now has operations
across 27 countries.In Feb 2014, Henry Schein took over four
distributors serving dentists and dental laboratories in France,
the Netherlands and Belgium, from a Dutch company, Arseus
NV. According to Henry Schein, these businesses will
strengthen its European Dental and Technology operations going
Moreover, Henry Schein is well positioned to gain from its
extensive global foothold and diverse channel mix. Favorable market
dynamics will serve as a major growth catalyst going forward. We
believe that high-growth avenues like the animal health market
should benefit Henry Schein's growth profile. We are also
encouraged to find that in spite of the austerity measures in
Europe, Henry Schein continues to garner market share in the Dental
However, on the flip side, the European economy and
macroeconomic uncertainty remain as overhangs. Intense competition
and currency headwinds warrant further caution. Moreover, as group
purchasing organizations (GPO) gain prominence, pricing pressure is
Other Stocks to Consider
Better-ranked stocks that warrant a look in the broader medical
). All these stocks carry a Zacks Rank #2 (Buy).
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