The U.S. Department of Defense (DoD) has awarded
DENTSPLY International Inc.
) a one-year contract worth $13.5 million to supply medical and
surgical products to the Army, Navy, Air Force, Marine Corps, and
federal civilian agencies. The contract is slated to end on Aug
20, 2014. However, there is additional provision for the
agreement to extend for another six years.
We believe that the deal with Pentagon should ensure a steady
stream of revenues for DENTSPLY in the backdrop of a challenging
macro environment. In the last reported quarter, XRAY's revenues
were almost flat year over year at $761.0 million. However,
excluding precious metal content, revenues grew 2.5% (up 2.7% at
constant exchange rate) to $716.0 million, driven by solid
internal sales in the U.S. and decent growth across all other
With a market cap of $6.01 billion, DENTSPLY is a leading dental
products maker based in York, Pa. The company's diversified
product range and significant investments in product innovation
should help it expand share in the dental market. Moreover,
management plans to invest in accretive acquisitions as well as
leverage investor returns in 2013.
However, the weak global dental market condition offers only
modest growth prospects. Austerity measures in southern Europe
due to geopolitical uncertainty led management to lower its
full-year 2013 earnings guidance.
Based on the current global dental market trends (particularly
Europe) along with the impact of fluctuating currency rates,
DENTSPLY lowered its 2013-adjusted-earnings per share expectation
to the band of $2.33-$2.38 compared with the earlier guidance of
$2.33-$2.43. The Zacks Consensus Estimate for 2013 earnings of
$2.35 lies within the guided range.
XRAY has a Zacks Rank #3 (Hold). While we remain on the sideline
regarding DENTSPLY, other medical stocks such as
The Cooper Companies
) are worth considering. All these stocks carry a Zacks Rank #2
ALIGN TECH INC (ALGN): Free Stock Analysis
COOPER COS (COO): Free Stock Analysis Report
HENRY SCHEIN IN (HSIC): Free Stock Analysis
DENTSPLY INTL (XRAY): Free Stock Analysis
To read this article on Zacks.com click here.