XRAY 2Q18: A Lot of Cavities that Need Filling; Lowering Estimates
HOLD
- 2Q18 (June) adjusted EPS was 60 cents (vs 65 cents a year earlier), a penny under our estimate as sales above our projection were more than offset by lower-than-anticipated margins;
- Dentsply announced a major sales and supply chain restructuring, with details to be provided at an upcoming Investor Day in 4Q18 (Dec),
- Our 2018 EPS estimate is now $2.03 (from $2.61 and a record $2.78 in 2016) off 24% from 2017, given the continued shortfalls, guidance reduction ($2.00-to-$2.15 for 2018 from $2.55-to-$2.65 previously) and risks associated with a major restructuring under a new CEO;
- While Dentsply expects benefits from the restructuring to begin in 2019, we are taking a cautious approach to our figures pending its outcome, and are reducing our 2019 EPS estimate to $2.17 (from $2.92).
DENTSPLY SIRONA is a manufacturer of dental products and technologies. The company's Consumables segment is responsible for the design, manufacture, sales and distribution of the company's dental consumable products which include preventive, restorative, endodontic, and dental laboratory products. The company's Technologies and Equipment segment includes responsibility for the design, manufacture, sales and distribution of the company's dental technology and equipment products and healthcare consumable products, including dental implants, computer-aided design/computer-aided manufacturing systems, orthodontic clear aligner products, imaging systems, treatment centers, instruments, and consumable medical device products.
Great Lakes Review is located in Cleveland, Ohio, was founded in 1981 and became a division of Wellington Shields & Co. LLC in 2011. Great Lakes Review is a research boutique focused on the fundamentally-oriented investor seeking companies that dominate their respective specialty niche regardless of industry. The objective is to make money for the long-term by gradually accumulating a diversified portfolio from a universe of no more than 30 companies. Although short-term-oriented accounts will be alerted to trading opportunities, aggressive sell recommendations are triggered only by a deterioration in long-term fundamentals, not by short-term blips or investor fancy. Coverage of those names that lose their earnings momentum or earnings predictability may be dropped and replaced with more vital candidates.
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