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Henry Schein Gains on Strategic Buyouts, Cost Concern a Woe

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On Oct 13, we issued an updated research report on Henry Schein, Inc. (HSIC - Free Report) , a leading distributor of health care products and services across the globe. The company carries a Zacks Rank #3 (Hold).

In terms of price return performance, over the past month, the stock remained in line with the broader industry.

We expect this trend to improve on balanced growth across all four operating segments of Henry Schein. We are also encouraged by the company’s efforts to grow internationally. Apart from North America and Europe, it has presence in Australia and New Zealand as well as emerging nations like China, Brazil, Israel, Czech Republic and Poland.

 

Also, the company continues to ride high within its dental business on majorly accretive strategic mergers and integrations. One colossal merger in this field is Poland-based Dental Cremer in 2016.

Henry Schein Animal Health’s revenue growth has been consistently supported by niche acquisitions. At the beginning of 2017, the company had made a foray in the Brazilian animal health market with a 51% investment in Tecnew. Around the same time, the company announced its decision to acquire Southern SAS, which in turn might benefit its dental business through controlled and non-controlled pharmaceuticals as well as surgical supplies.

Also, Henry Schein might gain from several trends in end markets like customer demographics. The increasing number of lives covered, following healthcare reforms in the United States, is likely to boost the company. Additionally, Henry Schein gains traction in animal health business on the back of tailwinds in North America as well as overseas markets. The burgeoning demand for animal health products in the United States should further drive the company’s growth. 

On the flip side, escalating costs and expenses continue to be a drag on the company’s margins and the bottom line. A tough competitive landscape and pricing pressure also weigh on Henry Schein’s stock.

Key Stocks

Some better-ranked stocks in the medical sector are QIAGEN (QGEN - Free Report) , IDEXX Laboratories, Inc. (IDXX - Free Report) and Thermo Fisher Scientific Inc. (TMO - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

QIAGEN has a long-term expected earnings growth rate of 13.1%. The stock has rallied roughly 26.8% last year.

IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has surged 45.6% last year.

Thermo Fisher has a long-term expected earnings growth rate of 11.7%. The stock has gained 27.5% last year.

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