On Jul 10, we issued an updated research report on Henry Schein, Inc. (HSIC - Free Report) . The company is well positioned to gain from its extensive global foothold and diverse channel mix. However, escalating costs and expenses are putting pressure on the bottom line. Henry Schein carries a Zacks Rank #3 (Hold).
Over the past six months, Henry Schein has underperformed its industry. The stock has lost 14.2% compared with the industry's 0.1% dip.
The coronavirus pandemic has severely dented the company’s dental revenues since March. A dismal performance by the company's biggest operating segment, Dental (down 4.6%), on suspension of non-emergency procedures in response to the pandemic, is concerning. We are also disappointed with the contraction in both margins. Its decision to refrain from providing a guidance is concerning as well.
Governments and insurance companies continue to look for ways to contain the rising cost of healthcare, which is affecting Henry Schein’s financial operations. Weak solvency and capital structure are also deterring. Other factors like the impact of group purchasing organizations and a stiff competitive landscape are bothersome.
On a positive note, during the first quarter, Henry Schein registered strong momentum in dental consumable merchandise and equipment internal sales in North America as well as internationally till early March, before being adversely impacted by the suspension of non-emergency procedures in response to the coronavirus outbreak.
Henry Schein seems to be upbeat about its dental technology business, Henry Schein One. Despite disruptions in the first quarter due to the coronavirus outbreak, the Henry Schein One dental software business holds potential.
Other products within the Henry Schein One portfolio like the beta version of its Tech Dentrix and Dentrix G7.3 are likely to maintain momentum.
Some better-ranked stocks from the broader medical space include Quest Diagnostics Incorporated (DGX - Free Report) , Laboratory Corporation of America Holdings (LH - Free Report) or LabCorp and QIAGEN N.V. (QGEN - Free Report) .
Quest Diagnostics’ long-term earnings growth rate is projected at 7.6%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp’s long-term earnings growth rate is estimated at 6.1%. The company presently sports a Zacks Rank #1.
QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently carries a Zacks Rank #1.
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