DENTSPLY SIRONA Strong On Deal Renewals, Forex Woes Stay
Zacks Investment Research | Oct 11, 2017 09:00PM ET
On Oct 11, we issued an updated research report on New York-based DENTSPLY SIRONA Inc. (NASDAQ:XRAY) — a global leader in the design, development, manufacture and marketing of dental consumables and dental laboratory products.
DENTSPLY recently announced the renewal of an existing distribution agreement with Henry Schein (NASDAQ:HSIC) Canada, Inc, which will continue till Dec 31, 2020. Henry Schein's agreement with DENTSPLY was initiated in August 2005.
We feel that the deal extension is a smart move by DENTSPLY 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, DENTSPLY announced the renewal of its partnership with Pacific Dental Services. The duo’s latest agreement extends for a period of five years which was signed in 2012.
This move is also a strategic one as Pacific Dental’s network consists of over 580 centers across 17 states. During the tenure of the present agreement, management expects the number of such offices utilizing DENTSPLY technologies to exceed 800.
DENTSPLY’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 full-year 2017 projecting adjusted EPS in the range of $2.65-$2.75.
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. Furthermore, higher capital expenditure on product development is expected to keep margins under pressure.
Share Price & Estimate Revisions Lack Luster
DENTSPLY's estimate revision trend looks unfavorable at the moment. For the third quarter, two analysts moved south, compared to no upward revision in the last two months. Notably, the current quarter estimates dropped 1.5% to 67 cents per share over the last 60 days.
DENTSPLY’s share price movement has been unfavorable over the last three months. The company shed 11.7%, much higher than the Zacks Investment Research
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