On Wednesday, Mizuho (NYSE:MFG) initiated coverage on Henry Schein (NASDAQ:HSIC), a leading global dental and medical distribution company. The firm has set a Neutral rating on the stock with a price target of $75.00. According to InvestingPro data, Henry Schein maintains a "GOOD" overall financial health score, with particularly strong profitability metrics.
The company's position as a prominent player in the Healthcare Providers & Services industry is reflected in its substantial $12.5 billion in trailing twelve-month revenue. Over the past two years, the company has struggled with organic sales growth due to soft end-markets, particularly in dental, and a significant cyber-attack in September 2023.
Henry Schein has not yet recovered the market share losses attributed to last year's cyber-attack. The repercussions of the incident were evident in the company's earnings per share (EPS) for 2023, which was reported at $4.50 compared to $5.38 in 2022.
The cyber-attack alone had a negative impact of approximately $0.70-0.75 on the EPS for the fourth quarter of 2023. InvestingPro analysis shows that eight analysts have recently revised their earnings estimates downward, though the consensus still projects EPS of $4.91 for 2024, slightly higher than Mizuho's estimate.
The growth expected in 2024 is primarily driven by cost-cutting measures and share buybacks, as the company's 'Dental Specialties' segment has seen a temporary halt in growth. With a current P/E ratio of 30.8 and trading slightly above its InvestingPro Fair Value, investors should note the stock's historically low volatility pattern.
Moreover, the company has expressed a cautious outlook for 2025, which is supported by findings from Mizuho's dental survey. For a deeper understanding of Henry Schein's valuation and growth prospects, InvestingPro subscribers can access the comprehensive Pro Research Report, which includes detailed analysis of the company's financial health, market position, and growth potential.
In other recent news, Henry Schein reported a slight growth in global sales for the third quarter of 2024, with a 0.4% year-over-year increase to $3.2 billion. However, the company's GAAP net income for the same period was reported at $99 million, a decrease from $137 million in Q3 2023. Non-GAAP net income also saw a decrease, from $173 million in the previous year to $155 million. Amidst these developments, Piper Sandler reaffirmed its Overweight rating on Henry Schein, following proposals from activist investor Ananym Capital Management advocating for significant changes within the company.
The firm's recommendations include organizational cost reductions, a potential sale of Henry Schein's Medical (TASE:PMCN) distribution arm, and alterations in the Board of Directors. In addition, Henry Schein has revealed plans to launch a global e-commerce platform in the US in 2025 and has increased its non-GAAP EPS guidance for fiscal 2024 to $4.74 - $4.82. The company expects modest overall equipment sales growth, with total sales growth for 2024 projected to be 4% to 5%.
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