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Here's Why You Should Retain DENTSPLY SIRONA (XRAY) Now

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·5 min read
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DENTSPLY SIRONA Inc. XRAY is well-poised for growth on a robust product portfolio and continued focus on research and development. However, forex remains a headwind.

Shares of this Zacks Rank #3 (Hold) company have lost 24.4% compared with the industry's decline of 2.7% on a year-to-date basis. The S&P 500 Index has fallen 7.9% in the same time frame.

The company, with a market capitalization of $9.09 billion, is a global leader in the design, development, manufacture and marketing of dental consumables, dental laboratory products, dental specialty products and consumable medical device products. It anticipates earnings to improve 10.1% over the next five years. It has beat estimates in three of the trailing four quarters and missed once, the average surprise being 10.2%.

What's Favoring the Stock?

DENTSPLY's introduction of PrimeScan, a digital impression scanner, and Primemill, among other major products, have been driving the company's top line over the past couple of years. It bolstered the consumable areas with Surefil one, Palodent 360 and the digital denture program. The company's Astra EV Implant has been gaining momentum as well.

Per the fourth-quarter 2021 earnings call, management announced the launch of Primeprint, a medical-grade, highly automated 3D printer that can aid dentists in bolstering workflows and practice efficiency. Apart from being an easy-to-use device, this 3D printer enables dentists to delegate several tasks related to 3D printing to their staff. Primeprint provides complete integration with the CEREC system and will enable the dentist to produce things, like night guards, surgical guides and full-scale models, in a quick and inexpensive manner.

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During the third quarter of 2021, the company launched ProTaper Ultimate, which is the first major endodontic platform innovation introduced in its endo business in more than five years. As part of a new platform, this will include new files of biosymmetric sealer and a new disinfection device. Apart from this, the company will introduce multiple new motor systems in early 2022. It will launch CEREC 5.2, a significant upgrade in Primescan as it further enhances speed and ease of use. This CEREC 5.2 upgrade supports the new dental scanning capability and differentiates Primescan in the marketplace.

Apart from these proven products, the company has an excellent new product pipeline that will positively impact 2022 and beyond.

DENTSPLY's overall growth strategy rests on product innovation. The company's solid internal growth despite challenging macroeconomic headwinds has been primarily driven by its innovative new products. It has been pursuing many research and development (R&D) initiatives to support technological development. Per the first-quarter 2021 earnings call, the company's R&D has been increasing significantly in 2021. Per management, this trend is likely to sustain in the near future as the company is focused on delivering innovation and excellent solutions to its customers.

In the fourth quarter of 2021, the company's spending on R&D was up 32.2% to $59 million, and the momentum is anticipated to continue as 2022 progresses. The company ended 2021 with R&D at 4% of revenues, and per management, it continues to be the crux of the company's growth strategy. This, in turn, will enable DENTSPLY to focus on a more significant and sustainable innovation. This allows the company to focus on developing larger and more impactful initiatives in the quarters ahead.

What's Weighing on It?

DENTSPLY has a significant international presence. Consequently, a strengthening U.S. dollar, especially against the euro, as well as emerging market currencies, have the potential to negatively impact the company's results.

Estimates Trend

The Zacks Consensus Estimate for first-quarter 2022 revenues is pegged at $1.03 billion, suggesting a decline of 0.1% from the year-ago reported number.

For 2022, the consensus mark for adjusted earnings per share stands at $3.10, suggesting an improvement of 8% from the previous year.

Stocks to Consider

Some better-ranked stocks from the broader medical space are AMN Healthcare Services, Inc. AMN, Patterson Companies, Inc. PDCO and Abiomed, Inc. ABMD.

AMN Healthcare surpassed earnings estimates in each of the trailing four quarters, the average surprise being 20%. The company currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

AMN Healthcare's long-term earnings growth rate is estimated at 16.2%. AMN's earnings yield of 8.9% compares favorably with the industry's (0.3%).

Patterson Companies beat earnings estimates in three of the trailing four quarters and missed once, the average surprise being 2.7%. The company currently carries a Zacks Rank #2 (Buy).

Patterson Companies’ long-term earnings growth rate is estimated at 9.9%. PDCO's earnings yield of 6.3% compares favorably with the industry's 3.5%.

Abiomed surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.2%. The company currently carries a Zacks Rank #2.

Abiomed's long-term earnings growth rate is estimated at 20%. ABMD's earnings yield of 1.5% compares favorably against the industry's (6.4%).


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DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report

ABIOMED, Inc. (ABMD) : Free Stock Analysis Report

Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report

AMN Healthcare Services Inc (AMN) : Free Stock Analysis Report

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