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DENTSPLY SIRONA XRAY is well-poised for growth due to its robust product portfolio and continued focus on research and development. However, forex remains a concern.
Shares of this Zacks Rank #3 (Hold) company have lost 46.4% year to date against the industry's 3.2% growth. The S&P 500 Index has gained 27.9% in the same time frame.
XRAY, with a market capitalization of $3.79 billion, is a global leader in the design, development, manufacturing and marketing of dental consumables, dental laboratory products, dental specialty products and consumable medical device products. It anticipates earnings to improve 10.5% over the next five years.
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What's Favoring the Stock?
Third-quarter organic growth was driven by favorable timing in Essential Dental Solutions of approximately $20 million related to stocking orders in anticipation of U.S. ERP deployment and higher sales in CAD/CAM, which benefited from the launch of XRAY’s new scanner, Primescan 2.
Meanwhile, DENTSPLY SIRONA continues to expand its product portfolio, thereby enhancing its growth prospects. Compared to Primescan AC and Primescan Connect, Primescan 2 is likely to help medical practitioners expand their treatment offerings, save time in daily workflows, and deliver enhanced patient care and comfort.
XRAY launched Lucitone for Primeprint in January. This is expected to accelerate the adoption of 3D printing in dental practices. Recently, XRAY expanded its collaboration with A-dec, a private dental office furniture and equipment manufacturer. This partnership is aimed at introducing a new integrated product offering that combines Primescan Connect with select A-dec delivery systems.
During the third quarter, the company almost completed the second phase of its transformation plan, which should help drive profitable growth. XRAY is likely to incur $40-$50 million in non-recurring charges in the rest of 2024 as well as in 2025. The plan is anticipated to result in annualized cost savings of $80-$100 million over the next 12-18 months.
Continued growth in the Essential Dental Solutions segment, which includes Endo, Resto and Preventive products in the United States, is likely to aid the top line in the upcoming quarters. Moreover, rising international demand, especially in China and Canada, looks promising. Meanwhile, SureSmile product sales reflect sustained demand, which was up 6% during the third quarter. Global CAD/CAM grew mid-single digit percentage points due to increased sales of mills and intraoral scanners during the third quarter, a trend likely to continue going forward. The continued growth of Wellspect Healthcare products in Europe and the rest of the world bodes well.