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DENTSPLY SIRONA Strong on Deal Renewals, Forex Woes Stay

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On Nov 20, we issued an updated research report on DENTSPLY SIRONA Inc. (XRAY - Free Report) — a global leader in the design, development, manufacture and marketing of dental consumables and dental laboratory products.

The New York-based company recently announced the renewal of an existing distribution agreement with Henry Schein Canada, Inc, which will continue till Dec 31, 2020. Henry Schein's agreement with DENTSPLY SIRONA was initiated in August 2005.

The deal extension is a smart move by DENTSPLY SIRONA as the preexisting agreement did not include the CEREC CAD/CAM restoration system and the Schick line of imaging sensors. By including the aforementioned lines of products, the company will benefit from Henry Schein’s distribution network in Canada.

Among the recent developments, the company announced the renewal of its partnership with Pacific Dental Services. This move strategic as Pacific Dental’s network consists of over 580 centers in 17 states. During the tenure of the present agreement, management expects the number of such offices utilizing DENTSPLY SIRONA’s technologies to exceed 800.

DENTSPLY SIRONA’s dual branding strategy, product innovation, growth opportunities in emerging markets (especially Asia-Pacific and Middle East/Africa), diversified product portfolio and recurring revenue base are key catalysts. The company expects a solid guidance for 2017 projecting adjusted EPS in the range of $2.65-$2.70.

On the flip side, apart from a series of macroeconomic headwinds, currency fluctuation continues to be a major dampener. In fact, strengthening of the U.S. dollar against Euro and other emerging market currencies has dented the company’s growth trajectory. Further, higher capital expenditure on product development is expected to keep margins under pressure.

DENTSPLY SIRONA’s price movement has been favorable in the last three months. The company’s shares have gained 23.7% compared with the industry’s rise of 3.8%.



Zacks Rank & Key Picks

DENTSPLY SIRONA currently carries a Zacks Rank #3 (Hold). A few better-ranked medical stocks are PetMed Express, Inc. , Align Technology, Inc. (ALGN - Free Report) and Myriad Genetics, Inc. (MYGN - Free Report) . Notably, PetMed, Align Technology and Myriad Genetics sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed has a long-term expected earnings growth rate of 10%. The stock has rallied roughly 76.6% over a year.

Align Technology has a long-term expected earnings growth rate of 28.9%. The stock has gained 163.9% in a year.

Myriad Genetics has a long-term expected earnings growth rate of 15%. The stock has gained 91.6% over a year.

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