DENTSPLY SIRONA XRAY is well-poised for growth on a robust product portfolio and continued focus on research and development. However, forex remains a concern.
Shares of this Zacks Rank #3 (Hold) company have lost 24% year to date against the industry's 0.3% growth. The S&P 500 Index has gained 20.5% in the same time frame.
XRAY, with a market capitalization of $5.41 billion, is a global leader in the design, development, manufacturing and marketing of dental consumables, dental laboratory products, dental specialty products and consumable medical device products. It anticipates earnings to improve 10.5% over the next five years.
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What's Favoring the Stock?
The sustained demand for Byte and SureSmile products has significantly driven the sales of DENTSPLY SIRONA's Orthodontic and Implant Solutions. Additionally, consistent patient visits and strategic pricing have contributed to the growth across various regions and product lines, enhancing the revenues of the Essential Dental Solutions division in the first half of 2024. The integration of Wellspect Healthcare's offerings has also boosted sales.
The Connected Technology Solutions segment continued to experience a robust increase in second-quarter sales, fueled by the rising demand for aligners and CAD/CAM devices. In addition to the encouraging demand for its products, XRAY is reaping the rewards of its transformative efforts launched at the beginning of 2023. These efforts encompass a reduction in workforce, a streamlined management hierarchy, consolidation of functions and enhancement of infrastructure efficiency.
During the second-quarterearnings call the company initiated the second phase of its transformation plan that should help it drive profitable growth. The plan is anticipated to result in $80-$100 million in annualized cost savings over the next 12-18 months. Such strategic measures have led to considerable cost reductions, thereby enhancing the company's potential to achieve double-digit profit growth in 2025.
Meanwhile, DENTSPLY SIRONA continues to expand its product portfolio, thereby enhancing its growth prospects. Earlier this month, it introduced a new, versatile and innovative intraoral scanner, Primescan 2. Compared to Primescan AC and Primescan Connect, Primescan 2 is likely to help medical practitioners expand their treatment offerings, save time in daily workflows, and deliver enhanced care and comfort to their patients.
XRAY launched Lucitone for Primeprint in January. This is expected to accelerate the adoption of 3D printing in dental practices. Recently, XRAY expanded its collaboration with A-dec, a private dental office furniture and equipment manufacturer. This partnership is aimed at introducing a new integrated product offering that combines Primescan Connect with select A-dec delivery systems.
What's Weighing on the Stock?
DENTSPLY SIRONA is facing macroeconomic headwinds in many regions, especially in ex-U.S. markets. Sales at Connected Technology Solutions were hurt during the secind quarter due to softness in imaging, a trend that is likely to plague the segment this year as well. Although there is an improved business sentiment in the United States, the same remains gloomy in German and Australian markets. Patient demand continued to remain low in China during the fourth quarter.
The company is facing a challenging macro environment, particularly in Germany and the United States. Soft demand in Europe may act as a headwind in 2024. The volume-based pricing policy in China can lead to lower prices in the country.
Estimate Trend
The Zacks Consensus Estimate for 2024 revenues is pegged at $3.88 billion, indicating a 2.1% decrease from the 2023 level.
The consensus mark for adjusted earnings per share is pinned at $1.99 for 2024, indicating an 8.7% year-over-year improvement.
DENTSPLY SIRONA Inc. Price
DENTSPLY SIRONA Inc. price | DENTSPLY SIRONA Inc. Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are STAAR Surgical STAA, The Cooper Companies COO and Boston Scientific BSX, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
STAAR Surgical has a growth rate of 15% for 2025. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 32.08%. STAAR Surgical’s shares have gained 19.3% compared with the industry’s 0.6% growth year to date.
The Cooper Companies has a long-term growth rate of 11.4%. Its earnings surpassed estimates in three of the trailing four quarters and met the same once, delivering an average surprise of 3.87%.
COO’s shares have risen 16.1% year to date compared with the industry’s 0.3% growth.
Boston Scientific has a long-term growth rate of 12.6% for 2024. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.18%.
BSX’s shares have risen 44.2% year to date compared with the industry’s 13.3% growth.
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