Dental Market Picks Up Pace Amid COVID-19: 3 Stocks to Watch
Since the advent of coronavirus, the whole world seems to be on a never-ending roller-coaster ride. From major upheavals in financial markets to people struggling to make ends meet. In fact, with infection rates spiking in several regions in the United States, a looming fear still continues to unnerve everyone, including investors.
Although the MedTech industry has shown resilience in the second half of the year, the dental space hasn’t been so fortunate. Revenues of most of the companies in this space took a hit reflecting the staggering impact of the COVID-19 pandemic.
However, it is encouraging to note that recovery in dental markets is picking up pace primarily owing to the lifting of stay-at-home orders and easing of prior restrictions. Let us delve deeper and analyze the factors that can boost prospects of this space amid the pandemic.
Dental Market: Slow Recovery Ahead
According to the analysts at Baird Equity Research, there has been an encouraging increase in patient volumes in spite of the rise in case counts in some states of the country. In fact, several companies in this space have been witnessing slow recovery from the month of July despite the pandemic. It is worth mentioning that there have not been any substantial changes in the demand for dental supplies or closure of dental practices for elective procedures.
Although the risk of contracting the virus has led to lower number of patient appointments available on a daily basis, clinicians have taken actions to counteract this impact. While some clinicians have resorted to teledentistry; others, especially dental support organization customers, have been focused on maximizing patient procedures per visit.
Moreover, dentists will continue to require dental consumables and lower-cost equipment and would be wary of making large investments in high-cost equipment amid this uncertain scenario. Companies dealing in these are well positioned to reap the benefits during this crisis.
Most of the players in this space are being cautiously optimistic, primarily courtesy of new product launches and remote consultation technologies.
For instance, Align Technology ALGN recently invested in a number of teledentistry solutions to help making remote check-ups a reality. The launch of Invisalign Virtual Appointment and Invisalign Virtual Care — a digital solutions enabling dental professionals to conduct video consultations with existing Invisalign patients reflect the company’s commitment toward enhancing treatment efficiency. This puts the company in a better position during this crisis, thereby boosting investors’ confidence.
Stocks to Watch
Going by the aforementioned discussion, the investors might want to keep an eye on these stocks that have shown considerable promise during this public health crisis.
SmileDirectClub, Inc. SDC has been able to hold its ground amid the pandemic backed by the flexibility and agility of its business model. The company benefited from the strength in its teledentistry platform during the second quarter of 2020. Moreover, in the second quarter, the company was able to ship 57,136 unique aligner orders at an average aligner gross sales price of $1,817. The company also witnessed sustained solid performance in its SmilePay program with delinquency rates and first pass credit card authorization rates being consistent with the past. Being a low-cost provider with significant brand presence and no pricing pressure, SmileDirectClub is well positioned to continue gaining market share in the vastly underserved space for clear aligners. Notably, for 2021, the Zacks Consensus Estimate for revenues is pegged at $884.2 million, suggesting an improvement of 40.9% from the previous year.
Year to date, shares of the Zacks Rank #3 (Hold) company have gained 33%, compared with the industry’s growth of 1.5%. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.
The Cooper Companies, Inc. COO saw both its segments – CooperVision and CooperSurgical – rebounding in the fiscal third quarter of 2020 after taking a hit from the pandemic. Moreover, the company has made substantial progress on MyDay manufacturing, and is now able to supply product to markets where they were earlier pulled back from. Also, the CooperSurgical segment exceeded expectations amid a challenging market environment. In fact, the company’s manufacturing and distribution teams kept the products available, thereby providing it the opportunity for future share gains.
MiSight witnessed growth of 35% in the fiscal third quarter, which resulted in revenues worth $1.6 million. The company has experienced a significant increase in interest from optometrists as they look for value added ways to increase patient flow as their practices reopen. Per fiscal-third quarter 2020 earnings call, management anticipates robust growth in the fiscal fourth quarter as the U.S. MiSight launch is currently fully underway.
Interestingly, the Zacks Consensus Estimate for fiscal 2021 revenues is pegged at $2.76 billion, indicating an improvement of 13.5% from the previous year. Year to date, shares of the Zacks Rank #3 company have gained 3.8%, compared with the industry’s growth of 1.5%.
McKesson Corporation’s MCK performance in the fiscal first quarter of 2021 exceeded its original expectations. In fact, the company raised fiscal 2021 guidance, with adjusted earnings per share projected in the range of $14.70-$15.50 (up from the previously guided range of $13.95-$14.75). Moreover, the Zacks Rank #3 company continues to remain focused when it comes to its multi-year strategic growth initiative update that is currently expected to generate approximately $400 million to $500 million in annual pre-tax gross savings. This will be substantially realized by the end of fiscal 2021. These, in turn, will instill investor confidence in the stock. Notably, the Zacks Consensus Estimate for fiscal 2021 revenues is pegged at $238.92 billion, suggesting growth of 3.4% from the previous year.
Year to date, shares of the company have gained 5.9%, compared with the industry’s growth of 1.5%.
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