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

DENTSPLY SIRONA 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) company have lost 47.3% compared with the industry's decline of 17.6% on a year-to-date basis. The S&P 500 Index has lost 21.3% in the same time frame.

The company, with a market capitalization of $6.52 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 10.4% next year.

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What's Favoring the Stock?

DENTSPLY's introduction of PrimeScan, a digital impression scanner, and Primemill, among other major products, has been driving the company's top line over the past couple of years. It bolstered the consumable areas with Surefil one, Palodent 360 and the digital denture program. The company's Astra EV Implant has been gaining momentum as well.

The company launched Primeprint, a medical-grade, highly automated 3D printer, earlier this year to bolster dentists’ workflows and practice efficiency. Apart from being an easy-to-use device, this 3D printer enables dentists to delegate tasks related to 3D printing to their staff. Primeprint provides complete integration with the CEREC system and will enable the dentist to produce things like night guards, surgical guides and full-scale models in a quick and inexpensive manner.

Last year, 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 the upcoming months. It will launch CEREC 5.2, a significant upgrade in Primescan as it further enhances speed and ease of use. This CEREC 5.2 upgrade supports the new dental scanning capability and differentiates Primescan in the marketplace.

Apart from these proven products, the company has an excellent new product pipeline that will aid its performance in 2022 and beyond.

DENTSPLY's overall growth strategy rests on product innovation. The company's solid internal growth despite challenging macroeconomic headwinds has been primarily driven by its innovative products. It has been pursuing many research and development (R&D) initiatives to support technological development. It will enable DENTSPLY to focus on a more significant and sustainable innovation. This allows the company to focus on developing larger and more impactful initiatives in the quarters ahead.

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.

DENTSPLY SIRONA has been unable to file its quarterly reports with the SEC in time due to an investigation of certain financial reporting matters initiated by its internal audit committee in May. The investigation hindered the preparation of financial reports during the second quarter as well. The company received a written notice from Nasdaq for filing delinquency from the exchange for its non-compliance with Nasdaq’s listing rules due to the non-filing of quarterly results. The delay in filing quarterly results due to the ongoing investigation may result in DENTSPLY SIRONA losing its coveted position.

Estimates Trend

The Zacks Consensus Estimate for 2022 revenues is pegged at $4.13 billion, suggesting a decline of 2.8% from the year-ago reported number.

For 2022, the consensus mark for adjusted earnings per share stands at $2.39, suggesting a decline of 16.7% from the previous year.

Stocks to Consider

Some better-ranked stocks from the broader medical space are Abiomed ABMD, Bio-Rad Laboratories, Inc. BIO and McKesson MCK. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Abiomed, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $1.25, which beat the Zacks Consensus Estimate by 15.7%. Revenues of $277 million missed the consensus mark by 0.4%.

Abiomed has a historical earnings growth rate of 24%. ABMD’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 10.89%.

Bio-Rad, sporting a Zacks Rank #1, reported second-quarter 2022 adjusted EPS of $3.38, which beat the Zacks Consensus Estimate by 37.4%. Revenues of $691.1 million outpaced the consensus mark by 3.9%.

Bio-Rad has a historical earnings growth rate of 31.2%. BIO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 46.8%.

McKesson reported second-quarter 2022 adjusted EPS of $5.83, which surpassed the Zacks Consensus Estimate by 9.8%. Revenues of $67.2 billion outpaced the Zacks Consensus Estimate by 5.1%. It currently carries a Zacks Rank #2 (Buy).

McKesson has an earnings yield of 6.9% compared with the industry’s 4.9% yield. MCK’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 13%.

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