Dentsply International Inc. has improved its balance sheet and will reap some savings as it continues to integrate the operations of Astra Tech, which it acquired in 2011, according to a Citi analyst who upgrades shares of the dental products company.
Analyst Jonathan Beake raised his rating on shares of the York, Pa., company to "Buy" from "Neutral" and inched up his price target on the stock to $49 from $39.65.
"We believe that Dentsply is an attractive investment opportunity at its current price," Beake wrote in a Monday morning analyst note.
Dentsply bought Astra Tech, a former unit of AstraZeneca PLC, in a $1.79 billion deal that made it one of the world's largest dental implant companies. The acquisition boosted its sales, but amortization and other costs from it hurt earnings for several quarters.
Beake said Dentsply has successfully reduced its debt and now has some ability to pursue acquisitions or buy back shares. He also said the companies have now combined sales and marketing, and Dentsply plans to set up its own manufacturing for Astra Tech implants, which are made by a third party.
"This should deliver considerable savings leading to material gross margin expansion," the analyst wrote.
Shares of Dentsply closed at $42.04 on Friday and have climbed about 6 percent since closing 2012 at $39.61.