SAUHF - A Tough Macro Environment Makes Dentsply Sirona's Turnaround Even Harder
2024-07-02 17:56:33 ET
Summary
- The dental market is sluggish, with higher out-of-pocket costs driving sluggish volumes and trading-down for this macro-sensitive segment of healthcare.
- Dentsply Sirona Inc. is seeing these trends hitting its own volumes, but the company's CAD/CAM and aligner businesses continue to grow.
- Management has implemented a lot of the strategic changes I hoped to see, including meaningful SKU reductions, a manufacturing/distribution footprint revision, and a cost efficiency program.
- Dentsply shares look undervalued on what should be achievable assumptions, but weak revenue growth and a challenging macro is likely to limit investor enthusiasm in the near term.
These are challenging times to sell into the dental market. With a much higher out-of-pocket component to costs, dental care is far more economically sensitive than other areas of healthcare, and market volumes have been soft despite a surge in Medicare spending/visits. With sluggish volumes and patients trading down from premium to value products, to say nothing of higher interest rates making it more expensive to bring equipment into practices, it’s a tough market....
A Tough Macro Environment Makes Dentsply Sirona's Turnaround Even Harder