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Here's Why You Should Retain Henry Schein (HSIC) Stock Now

Zacks Equity Research

Henry Schein, Inc. HSIC is currently in investors’ good books, courtesy of strategic acquisitions and portfolio expansion.

The company has outperformed its industry in the past six months. The stock has rallied 1.7% against the industry’s 14.1% fall.

The provider of dental technology has a market cap of $9.33 billion.

Overall, this company has a Zacks Rank #3 (Hold) at the moment.

Strategic Acquisitions: The company’s recent acquisition of Cliniclands in August 2019 is promising. This should establish Henry Schein's presence in Scandinavian markets. In July, the company forayed into the Italian dental practice management software market with the small but crucial takeover of Elite Computer Italia. Henry Schein also recently entered into an agreement to buy Lighthouse 360. These should continue working in favor of the company through the year.

Henry Schein One Progresses: The company has been expanding market share with its Henry Schein One business globally.In July, Henry Schein One launched additional products like Dentrix Smart Image, enhanced Dentrix service bundles including Optimum Pro for payment management services and the Dentrix Ascend Quick Exam module. These developments are likely to keep contributing to the top line in 2019.

Portfolio Expansion: In August 2019, the company announced the expansion of its SolutionsHub portfolio with additions like CueSquared MobilePay and cloud-based digital platform viz. Greenlight Behavioral Assessments.

However, a few factors have been deterring growth lately.

Tough Competitive Landscape: In the North American dental products market, the company faces stiff competition from Patterson Companies Inc. and Benco Dental Supply.

Macroeconomic Uncertainty: The global macroeconomic environment has affected Henry Schein’s financial operations. Governments and insurance companies continue to look for ways to contain escalating healthcare costs. This might exert pressure on players in the healthcare industry, with Henry Schein being no exception.

Which Way Are Estimates Treading?

For the third quarter of 2019, the Zacks Consensus Estimate for earnings is pegged at 86 cents, which indicates a 16.5% fall from the year-ago quarter’s figure. The same for revenues is pegged at $2.52 billion, calling for a year-over-year drop of 23.1% from the prior-year quarter’s number.

For 2019, the Zacks Consensus Estimate for earnings is pegged at $3.46, calling for a 16.2% year-over-year decline. The same for revenues is pegged at $9.97 billion, suggesting a 24.5% fall from the prior-year quarter’s level.

Key Picks

A few better-ranked stocks in the broader medical space are Stryker SYK, Medtronic MDT and Varian VAR. While Varian has a Zacks Rank #1 (Strong Buy), the other two carry a Zacks Rank #2 (Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Stryker’s long-term earnings growth rate is expected to be 10.04%.

Medtronic’s long-term earnings growth rate is projected at 7.32%.

Varian’s long-term earnings growth rate is expected to be 8%.

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