DENTSPLY SIRONA (XRAY Quick QuoteXRAY - Free Report) is well positioned for growth due to its new digital-implant workflow and continued focus on research and development. However, forex headwinds and demand softness in Europe remain a concern.

Shares of this Zacks Rank #3 (Hold) company have lost 12.2% year to date compared with the industry's 4.3% decline. The S&P 500 Index has gained 8.1% in the same time frame.

XRAY, with a market capitalization of $2.1 billion, is a global leader in the design, development, manufacturing and marketing of dental consumables, dental laboratory products, dental specialty products and consumable medical device products. It anticipates earnings to improve 5.9% over the next five years.

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Factors Favoring XRAY’s Growth

Return-to-Growth Plan Creates a Clear Framework for Operational Recovery: DENTSPLY Sirona’s most important positive catalyst is the disciplined execution of its 24-month “Return-to-Growth” strategy. Management has already completed key organizational restructuring initiatives, expanded sales-force training, strengthened commercial leadership and improved distributor engagement.

The company generated approximately $20 million of operating expense savings in the first quarter, demonstrating that restructuring benefits are beginning to materialize. Management expects the broader restructuring program to deliver roughly $120 million in annual savings, with a larger contribution emerging in the second half of 2026 and beyond.

While revenue growth remains muted currently, the combination of cost rationalization, commercial reinvestment and improved accountability could significantly enhance earnings leverage if execution improves. The strategy provides a credible roadmap for restoring profitability and accelerating growth into 2027 and 2028.

Distribution Expansion Could Reignite U.S. Market Share Gains: Management repeatedly emphasized that restoring U.S. growth is the company’s top priority, and recent distributor wins suggest early progress. During the first quarter, DENTSPLY signed multiple new distribution agreements and expanded existing relationships, including a broader partnership with Atlanta Dental Supply. Early traction is already visible, with Benco installing its first CEREC system ahead of schedule.

These partnerships improve geographic reach, customer access and product availability without requiring substantial internal infrastructure expansion. Given that distributor inventory levels remain below historical averages, any normalization could further support future sales. If the company successfully leverages its broad portfolio across imaging, CAD/CAM, consumables and equipment, the enhanced distribution network may become a meaningful growth driver and help the company regain competitive positioning in key U.S. markets.

Innovation Pipeline Strengthens Competitive Positioning: DENTSPLY is increasing R&D investment despite near-term earnings pressure, signaling confidence in future product opportunities. The recently launched Smart View-Detect, an AI-enabled diagnostic platform, improves detection sensitivity by approximately 46% compared with unaided review.

Other new products include latest endodontic solutions and an FDA-cleared dental MRI system. These innovations align with broader industry trends toward digital workflows, AI-assisted diagnostics and integrated treatment planning. Management also highlighted enterprise AI deployment across commercial and operational functions.

Although the financial contributions from these products may not become meaningful until 2027 or later, they enhance the company’s technology leadership and provide avenues for differentiation against lower-cost competitors. Sustained innovation could improve customer retention while expanding penetration within digitally connected dental practices.

Downsides for XRAY

Core Business Trends Remain Weak Across Multiple Segments: While management emphasized future recovery initiatives, current operating performance remains challenging. On a constant-currency basis, revenues declined 6.7%, with weakness spanning several major businesses, including Essential Dental Solutions (“EDS”), Orthodontic and Implant Solutions (“OIS”) and parts of Connected Technology Solutions (“CTS”).

Implant volumes declined across all regions, while EDS posted a significant 7.2% decline, reflecting softer demand and potential dealer destocking activity. The breadth of these declines suggests that the turnaround remains in its early stages and is yet to materially improve the market performance. Until revenue stabilization becomes visible across key segments, investors may remain skeptical regarding management’s ability to convert strategic initiatives into sustainable top-line growth.

Margin Pressure From Tariffs, Mix and Volume Absorption: Profitability deteriorated materially during the first quarter as adjusted EBITDA margin contracted approximately 430 basis points. Management cited multiple headwinds, including tariffs, unfavorable product mix, lower manufacturing absorption and weakness in high-margin consumables. EDS, one of the company’s most profitable segments, experienced notable declines, creating additional margin pressure.

Although management expects some tariff relief and operational improvements later in the year, many of these challenges remain outside the company’s direct control. Continued geopolitical uncertainty, elevated freight costs and inflationary pressures could delay margin recovery. If revenue growth fails to accelerate sufficiently, the anticipated benefits from restructuring efforts may be partially offset by ongoing cost headwinds.

Implant Franchise Underperforming:The performance of its implant business, which remains one of the company’s most strategically important franchises, remains unsatisfactory. Implant sales declined across all geographic regions despite management’s view that the portfolio contains some of the strongest products in the market. The issue appears to be less about product quality and more about execution, clinical education and sales effectiveness.

However, execution-related challenges can be difficult to resolve quickly, particularly in highly competitive dental implant markets. Because implants represent a key component of management’s growth strategy, prolonged weakness could undermine broader turnaround efforts and limit the company’s ability to achieve above-market growth over the next several years.

DENTSPLY SIRONA Inc. Price

DENTSPLY SIRONA Inc. price | DENTSPLY SIRONA Inc. Quote

XRAY’s Estimate Trend

The Zacks Consensus Estimate for 2026 revenues is pegged at $3.58 billion, indicating a 2.7% decrease from the 2025 level.

The consensus mark for adjusted earnings per share is pinned at $1.42 for 2026, indicating an 11.3% year-over-year decline.

Stocks to Consider

Some better-ranked stocks from the same medical industry are Align Technology (ALGN Quick QuoteALGN - Free Report) , West Pharmaceutical Services (WST Quick QuoteWST - Free Report) and Cardinal Health (CAH Quick QuoteCAH - Free Report) .

Align Technology, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 10.3%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 7.80%. You can see the complete list of today’s Zacks #1 Rank stocks here.

ALGN’s shares have gained 9.2% against the industry’s 4.2% decline so far this year.

West Pharmaceutical, currently carrying a Zacks Rank of 1, has an estimated long-term growth rate of 13.9%. WST’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 19.37%.

West Pharmaceutical’s shares have gained 20.2% against the industry’s 4.2% decline year to date.

Cardinal Health, currently carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 17%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 10.27%.

CAH’s shares have gained 5.2% against the industry’s 4.2% decline so far this year.