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DENTSPLY SIRONA (XRAY) Up on Strong Q2 Preliminary Results

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Shares of DENTSPLY SIRONA Inc. (XRAY - Free Report) have gained 3% since it reported strong preliminary second-quarter 2022 results on Aug 4, after market close. The adjusted earnings per share (EPS) were estimated to be at or above 60 cents. The Zacks Consensus Estimate for earnings was pegged at 54 cents. Going by this preliminary announcement, the bottom line declined 15.5% from the prior-year quarter.

Per the same announcement, GAAP EPS in the quarter is estimated to be at or above 26 cents, down 42.2% from the year-ago quarter.

The stock has lost 32% so far this year compared with the industry’s decline of 9.7%.

Zacks Investment Research
Image Source: Zacks Investment Research

Revenues

Per the preliminary results, revenues in the quarter under review amounted to $1.01 billion or greater, down 5.8% from the year-ago quarter. The revenues were in line with estimates.

The year-over-year decline in revenues is expected due to the unfavorable impact of foreign exchange. However, sales were up organically driven by solid regional performance in Europe and continued demand for its strategic businesses, including CAD/CAM, Equipment & Instruments, and Restorative and Preventive Consumables.

DENTSPLY SIRONA stated that dealer inventory levels were normalizing during the second quarter, following the negative impacts of COVID-19. Moreover, product launches and pricing adjustments during the quarter aided sales. However, the company continued to experience supply shortages and softness in sales in China due to COVID-related shutdowns.

The company stated that gross margin and adjusted EPS were favorably impacted during the second quarter due to the timing of certain expenses. These expenses will hurt margins in the second half of 2022.

The company did not report any details related to its segments due to an ongoing internal investigation by its audit committee.

DENTSPLY SIRONA Inc. Price and EPS Surprise

DENTSPLY SIRONA Inc. Price and EPS Surprise

DENTSPLY SIRONA Inc. price-eps-surprise | DENTSPLY SIRONA Inc. Quote

2022 Guidance Maintained

Per the preliminary announcement, the company projects 2022 revenues within $4.1-$4.2 billion. The Zacks Consensus Estimate for the same is pegged at $4.23 billion. The outlook includes organic sales growth of 2-3%.

The company expects adjusted EPS in the range of $2.35-$2.55. The Zacks Consensus Estimate for the same stands at $2.60.

The adjusted operating margin is projected to exceed 17% in 2022.

Audit Committee Investigation Update

We note that DENTSPLY SIRONA has been unable to file its quarterly reports with Security Exchange Commission (SEC) in time due to an investigation of certain financial reporting matters initiated by its internal audit committee in May. The investigation has also hindered the preparation of financial reports during the second quarter as well.

DENTSPLY SIRONA is working to complete the investigation as soon as possible. However, the duration or outcome of the investigation remains uncertain. The inability to file first-quarter results with SEC on time led Nasdaq to issue a notice of non-compliance of the Nasdaq Listing Rules against the company in May. The company had submitted a plan to regain compliance in which it targeted to complete the filing of the quarterly reports by Aug 14, 2022. However, in its second-quarter preliminary results release, the company stated that it had informed the Nasdaq staff that it does not expect to meet the targeted date for filing. It is looking to file an updated plan, which may allow the company to remain listed on the exchange till Nov 7, if accepted.

Zacks Rank and Stock to Consider

Currently, DENTSPLY SIRONA has a Zacks Rank #4 (Sell).

Some better-ranked stocks from the pharma/biotech sector include ShockWave Medical (SWAV - Free Report) , Patterson Companies (PDCO - Free Report) and Alkermes (ALKS - Free Report) . While ShockWave Medical sports a Zacks Rank #1 (Strong Buy), Patterson Companies and Alkermes carry a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

ShockWave Medical’s earnings per share estimates have improved from $1.84 to $2.02 for 2022 and from $2.82 to $2.95 for 2023 in the past 60 days. SWAV has gained 23% so far this year.

ShockWave Medical delivered an earnings surprise of 189.99%, on average, in the last four quarters.

Estimates for Patterson Companies have improved from earnings of $2.25 to $2.30 for 2022 and $2.42 to $2.48 for 2023 in the past 60 days. PDCO stock has risen 7.9% so far this year.

Patterson Companies delivered an earnings surprise of 16.49%, on average, in the last four quarters.

Alkermes’ earnings per share estimates have improved from a loss of 17 cents to earnings of 20 cents for 2022 and from 31 cents to 50 cents for 2023 in the past 60 days. ALKS has gained 9.3% so far this year.

Alkermes delivered an earnings surprise of 325.48%, on average, in the last four quarters.