On Monday, Stifel maintained its Hold rating on DENTSPLY SIRONA (NASDAQ:XRAY) shares with a consistent price target of $28.00. The firm highlighted the dental equipment maker's ongoing efforts to enhance earnings per share through operational efficiency, including SKU rationalization and plant optimization. These steps are expected to contribute to an increase in EPS even as projected revenue growth for 2025 and 2026 is anticipated to be below the company's long-range plan (LRP) target of 4-6%.
Stifel's outlook for DENTSPLY SIRONA's top-line growth remains cautious, with particular concerns about the performance of the company's Technologies & Equipment (CTS (NYSE:CTS)) division. The analyst noted that the CTS division is facing challenges as equipment sales continue to be under pressure and the division's decremental margin has been significant. However, the upcoming PS2 product launch is seen as a potential positive, and the firm is also considering the possible effects of declining interest rates on the Equipment & Instruments (E&I) division.
Despite these potential positives, Stifel forecasts only modest revenue growth for the company in 2025, including a predicted 1.1% decline in the CTS division's revenue. Challenges in other divisions were also mentioned, such as difficulties in reviving the implants business, regulatory hurdles faced by Byte, and questions regarding SureSmile's penetration into the orthodontics market.
The firm also pointed to the consumables segment, where patient volumes have been weak and pricing power is limited. This is attributed to the rise of private label products, which are increasingly being adopted in the market.
In other recent news, DENTSPLY SIRONA reported a 4.2% decline in its second-quarter revenue, falling to $984 million, primarily due to weaker performance in the Connected Technology Solutions segment. However, the company saw organic growth in other segments and is actively restructuring to improve efficiency. The company's full-year net sales are projected to be between $3.86 billion to $3.90 billion, with adjusted earnings per share (EPS) expected to be in the range of $1.96 to $2.02.
In executive changes, Glenn Coleman, the company's Chief Financial Officer, is set to resign from his position in November. DENTSPLY SIRONA has initiated a search for a successor with the help of an executive search firm.
On the analyst front, Stifel reiterated a Hold rating on DENTSPLY SIRONA shares with a $28.00 price target, while Piper Sandler and Baird maintained their neutral stance with respective price targets of $32.00 and $31.00.
In other company news, DENTSPLY SIRONA highlighted the launch of the Primescan 2 dental scanner at the DS World event and discussed its readiness for potential disruptions, such as an East Coast port shutdown, and progress in their inside representative hiring initiative. These are all recent developments shaping the course of DENTSPLY SIRONA.
InvestingPro Insights
DENTSPLY SIRONA's financial landscape, as revealed by InvestingPro data, offers additional context to Stifel's analysis. The company's market capitalization stands at $5.48 billion, with a price-to-book ratio of 1.79, indicating that the stock is trading above its book value. This could be seen as a sign of investor confidence in the company's future prospects, despite the challenges highlighted in the article.
InvestingPro Tips suggest that DENTSPLY SIRONA has been aggressively buying back shares and offers a high shareholder yield. This aligns with the company's efforts to enhance earnings per share through operational efficiency, as mentioned in the article. The company has maintained dividend payments for 31 consecutive years, demonstrating a commitment to returning value to shareholders even in challenging times.
However, it is worth noting that the company's revenue growth has been negative, with a -1.02% decline over the last twelve months and a -4.28% decline in the most recent quarter. This data supports Stifel's cautious outlook on the company's top-line growth.
While the article mentions concerns about various divisions, InvestingPro Tips indicate that net income is expected to grow this year, and analysts predict the company will be profitable. This suggests that DENTSPLY SIRONA's efficiency measures may be starting to bear fruit, potentially offsetting some of the revenue challenges.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips for DENTSPLY SIRONA, providing a deeper dive into the company's financial health and market position.
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