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Danaher (DHR) Names New Dental Company Envista Holdings

Zacks Equity Research

Danaher Corporation DHR recently confirmed the name of the separate dental company it plans to create as Envista Holdings Corporation. It plans to take Envista public through an initial public offering in the second half of 2019. Notably, the new company will be listed on the New York Stock Exchange under the ticker symbol “NVST”, and is likely to employ 12,000 people globally.

Envista will consist of Danaher Dental segment’s three operating businesses — Nobel Biocare Systems, Ormco and KaVo Kerr. These have strong exposure in dental implants, dental equipment, orthodontics and consumables. Some notable brands of these businesses are Nobel Biocare, Kerr, i-CAT, KaVo, Dexis, Pelton & Crane, Metrex, Ormco, Implant Direct and Orascoptic.

Notably, Envista’s logo of concentric circles signifies its capability to jointly realize endless possibilities ahead. As noted by Danaher, Amir Aghdaei will be appointed the president and CEO of Envista. Its operations will follow the new business operating model — Envista Business System — which is built on the Danaher Business System.

Existing Business Scenario

Rising cost of sales has been a major cause of concern for Danaher. For instance, the company's cost of sales increased 5.4% year over year in first-quarter 2019. Also, in the quarter, its selling, general and administrative, and research and development expenses increased 5.1% and 4.1%, respectively.

Although international operations are reflective of Danaher's prosperity, it has exposed the company to risks from unfavorable movements in foreign currencies and geopolitical issues. Sales in the first quarter were lowered 2% due to forex woes. Persistence of this headwind might also be detrimental to the company’s profitability in the quarters ahead.

In the past month, this Zacks Rank #4 (Sell) stock has returned 8.3% compared with 5.2% rise recorded by the industry.

Key Picks

Some better-ranked stocks in the same space are Carlisle Companies Incorporated CSL, Crane Co. CR and Federal Signal Corporation FSS. Al these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Carlisle surpassed estimates thrice in the trailing four quarters, the average positive earnings surprise being 19.07%.

Crane outpaced estimates in each of the preceding four quarters, the average positive earnings surprise being 6.74%.

Federal Signal surpassed estimates in each of the trailing four quarters, the average positive earnings surprise being 21.75%.

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