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Here's Why You Should Retain DENTSPLY SIRONA (XRAY) Now

Zacks Equity Research
·4 min read

DENTSPLY SIRONA Inc. XRAY is well-poised for growth on a robust product portfolio and continued focus on research and development. However, forex remains a headwind.

Shares of this Zacks Rank #3 (Hold) have lost 2.2% against the industry’s growth of 14% in a year’s time. The S&P 500 Index has rallied 27.6% in the same time frame.

The company, with a market capitalization of $10.88 billion, is a global leader in the design, development, manufacture and marketing of dental consumables, dental laboratory products, dental specialty products and consumable medical device products. It anticipates earnings to improve 22.3% over the next five years. It has beat estimates in each of the trailing four quarters, the average surprise being 20.2%.

What’s Favoring the Stock?

DENTSPLY’s introduction of PrimeScan, a digital impression scanner, and Primemill, among other major products, have been driving the company’s top line over the past couple of years. It also provided a boost to the consumable areas with Surefil one, Palodent 360 and the digital denture program. The company’s Astra EV Implant has been getting good traction as well.

During the third quarter of 2021, the company launched ProTaper Ultimate, which is the first major endodontic platform innovation introduced in its endo business in more than five years. As part of a new platform this will include new files of biosymmetric sealer and a new disinfection device. Apart from this, the company will introduce multiple new motor systems in early 2022. It will launch CEREC 5.2, which will be a significant upgrade in Primescan that further enhances its speed and ease of use. This CEREC 5.2 upgrade supports the new dental scanning capability and differentiates Primescan in the marketplace.

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Apart from these proven products, the company has an excellent new product pipeline that will positively impact 2021 and beyond.

DENTSPLY’s overall growth strategy rests on product innovation. The company’s solid internal growth, despite challenging macroeconomic headwinds, is primarily driven by its innovative new products. The company has been pursuing several research and development (R&D) initiatives to support technological development. Per the first-quarter 2021 earnings call, the company’s R&D has been increasing substantially in 2021 and as per management this trend is likely to sustain in the near future as it is focused on delivering innovation and excellent solutions to its customers.

In fact, in the third quarter, the company’s spending on R&D was up 12.2% to $40 million, and the trend is anticipated to continue as the year progresses. This, in turn, will enable DENTSPLY to focus on more significant and sustainable innovation. Apart from choosing a disciplined approach to ensure alignment with its strategic objectives, the company’s targeted R&D investments are on track to reach approximately $160 million in 2021.

What’s Weighing on It?

DENTSPLY has a significant international presence. Consequently, a strengthening U.S. dollar, especially against the euro, as well as emerging market currencies has the potential to negatively impact the company’s results.

Estimates Trend

The Zacks Consensus Estimate for fourth-quarter 2021 revenues is pegged at $1.13 billion, suggesting growth of 4.3% from the year-ago reported number.

For 2021, the consensus mark for adjusted earnings per share stands at $2.89, suggesting an improvement of 0.3% from the previous year.

Stocks to Consider

Some better-ranked stocks in the broader medical space include Thermo Fisher Scientific Inc. TMO, McKesson Corporation MCK and AngioDynamics, Inc. ANGO.

Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company currently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Thermo Fisher’s long-term earnings growth rate is estimated at 14%. The company’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).

McKesson beat earnings estimates in each of the trailing four quarters, the average surprise being 19.9%. The company currently carries a Zacks Rank #2.

McKesson’s long-term earnings growth rate is estimated at 8.9%. The company’s earnings yield of 9.9% compares favorably with the industry’s 3.2%.

AngioDynamics surpassed earnings estimates in three of the trailing four quarters and missed once, the average surprise being 125.6%. The company currently sports a Zacks Rank #2.

AngioDynamics’ consensus mark for revenues for fiscal 2022 stands at $313.3 million, suggesting an improvement of 7.7% from the prior-year reported figure. The company’s earnings yield of 0.1% compares favorably with the industry’s (3.6%).


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AngioDynamics, Inc. (ANGO) : Free Stock Analysis Report

Thermo Fisher Scientific Inc. (TMO) : Free Stock Analysis Report

McKesson Corporation (MCK) : Free Stock Analysis Report

DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report

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Zacks Investment Research