On Friday, Citi updated its outlook on Straumann Holding AG (STMN:SW) (OTC: SAUHF) stock, a leading dental product company, by increasing the price target to CHF105.00 from CHF100.00. The firm, however, has maintained its Sell rating on the stock.
The adjustment comes in the wake of recent data showing that China's imports of Swiss dental fittings and artificial teeth declined by 30% year-over-year in June. This follows a 32% decrease in May and contrasts with a 3% increase in April. The analyst noted that Straumann will begin to annualize easier comparisons starting from the second quarter of 2024.
The revision also takes into account the recent financial results of Align (NASDAQ:ALGN) Technology. Align, which is not covered by the Citi analyst, reported second-quarter 2024 revenues and provided third-quarter and full-year 2024 guidance that fell short of market expectations.
Align attributed its lower-than-expected performance to a shift towards lower average selling price (ASP) products and increased discounts, despite seeing stable end-market conditions.
Citi's analysis suggests that the disappointing data from Align, combined with the Chinese import statistics, raises concerns about the overall health of the dental consumer sector.
With many healthcare and consumer companies already indicating consumer weakness in China, Citi anticipates increased downside risks to consensus expectations for the market in the second half of 2024.
Citi's updated forecasts for Straumann are cautious. The firm's 2024 organic revenue growth prediction is approximately 160 basis points below the consensus, and its earnings per share (EPS) estimate for 2024 is around 6% lower than the consensus.
Despite the new price target of CHF105, Citi reiterated its Sell stance on Straumann shares, signaling that it expects the company's performance to lag behind market expectations.
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