Envista (NVST) Faces Macroeconomic Challenges, FX Headwind
Envista Corporation NVST continues to suffer due to unfavorable currency movement. Strong competitors also pose a tough challenge for the company. The stock has a Zacks Rank #5 (Strong Sell) currently.
Envista has been grappling with deteriorating international trade, with global inflationary pressure leading to a challenging situation related to raw material and labor costs as well as freight charges and rising interest rates. All these are creating significant pressure on the company’s profitability.
Additionally, Russia’s invasion of Ukraine and the global response to this invasion, including sanctions imposed by the United States and other countries, are having an adverse impact on the company’s overall business. These impacted Envista’s ability to market and sell products in the affected regions and also heightened the risk of cyber security attacks, impacting its ability to enforce its intellectual property rights in Russia and creating disruptions in the global supply chain.
The challenging macroeconomic conditions are resulting in a significant escalation in the company’s costs and expenses. During the fourth quarter of 2023, Envista’s SG&A expenses rose 2.6%. The company’s operating profit fell 36.9% year over year.
Envista Holdings Corporation Price
Envista Holdings Corporation price | Envista Holdings Corporation Quote
Added to this, significant portions of Envista's sales and costs are exposed to changes in foreign exchange rates. The company’s operations use multiple foreign currencies, including the euro, British pound, Brazilian real, Australian dollar, Japanese yen, Canadian dollar and Chinese yuan. Changes in these currencies relative to the U.S. dollar impact its sales, cost of sales and expenses, and consequently net income.
Sales in the fourth quarter of 2023 declined 0.3% due to the impact of foreign currency exchange rates. Core sales were down 2% year over year.
Envista’s businesses operate in intensely competitive industries. Its primary competitors include DENTSPLY SIRONA, IVERIC bio, Alkermes, The Ensign Group, Organon & Co., Ascendis Pharma A/S, HealthEquity, Option Care Health and Vaxcyte.
On a positive note, Envista’s Specialty Products & Technologies business is gaining momentum, banking on strategic development, manufacturing and marketing of dental implant systems, including regenerative solutions, dental prosthetics, and associated treatment software and technologies, as well as orthodontic bracket systems, aligners and lab products.
In terms of the latest developments, Envista’s Specialty Products and Technology arm continued to perform well. During the fourth quarter, the segment grew 4.8%, driven by solid growth in Western Europe and emerging markets.
The company’s orthodontic business registered double-digit growth. The business grew nearly 15%, with Spark continuing to outperform. The Bracket & Wires business delivered mid-single-digit growth, with emerging markets performing especially well.
Key Picks
Some better-ranked stocks in the broader medical space are DaVita DVA, Cardinal Health CAH and Stryker SYK. While DaVita sports a Zacks Rank #1 (Strong Buy), Cardinal Health and Stryker carry a Zacks Rank #2 (Buy) each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Estimates for DaVita’s 2024 earnings per share have moved from $8.46 to $8.97 in the past 30 days. Shares of the company have surged 81.9% in the past year compared with the industry’s 26.9% rise.
DVA’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 35.57%. In the last reported quarter, it delivered an earnings surprise of 22.22%.
Cardinal Health’s stock has surged 59.1% in the past year. Earnings estimates for Cardinal Health have risen from $7.17 to $7.28 for fiscal 2024 and from $7.94 to $8.03 for fiscal 2025 in the past 30 days.
CAH’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 15.6%. In the last reported quarter, it posted an earnings surprise of 16.67%.
Estimates for Stryker’s 2024 earnings per share have increased from $11.84 to $11.86 in the past 30 days. Shares of the company have moved 30.7% upward in the past year compared with the industry’s rise of 10.8%.
SYK’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.09%. In the last reported quarter, it delivered an earnings surprise of 5.81%.
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