Morningstar | Dentsply Sirona Reports Weak 4Q Performance, but Restructuring Efforts Should Bear Fruit in 2019
Dentsply Sirona's fiscal fourth-quarter 2018 results mostly met our expectations. We anticipate a slight increase in our fair value estimate as we incorporate the company's higher-than-expected 2019 outlook, and we are leaving our no-moat rating intact. The company issued fiscal 2019 revenue guidance between $3.95 billion and $4.05 billion (versus our prior estimate of roughly $4 billion) along with an adjusted EPS range of between $2.25 and $2.40 (above our prior estimate of $2.19). We think the company's restructuring efforts and new product launches should enable meaningful improvements, but we would not be surprised to see this guidance range narrow as the year progresses.While the Dentsply's performance during the quarter continued to show significant weakness, we think the company's restructuring should start to bear fruit in the year ahead. The company still experienced degrading profitability during the period, with gross margins falling 395 basis points due to broad pricing pressure and imaging business headwinds. While we think pricing pressure is unlikely to abate for most of the company's portfolio, we do think new products being launched under a more optimized corporate structure should enable some profitability improvement. We think the launch of its fully open-architecture Primescan dental scanner should bring much-needed life to the company's equipment segment (overall segment revenue fell by roughly 8% versus the year-ago period) but we are skeptical that the company will quickly steal significant market share from Align's iTero scanners. Separately, Dentsply Sirona's consumables segment held roughly 3% growth year over year thanks to the recovery of a European distribution center that helped offset U.S. market weakness. While we think the segment should experience relatively low growth moving forward thanks to restructuring progress, we remain concerned about the increasing concentration of buyers on long-term pricing power.
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.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.