Dentsply Sirona (XRAY) Another Seeing A Bit Of Plaque Build Up Following EPS Miss
1:52 pm Monday, November 14th, 2022
Dentsply Sirona (XRAY) is heading lower after the world’s largest manufacturer of dental products missed on EPS and revenue in its Q3 report this morning. This was XRAY’s third EPS miss in a row. While the prior two misses were small, XRAY missed by a wide margin in Q3 and we think this took investors by surprise. One would think that dental sales should be pretty steady and predictable but XRAY faced some headwinds this quarter.
Both of its major segments saw similar weakness. On the Equipment side, revenue fell 9% yr/yr to $556 mln while Consumables sales fell 8.7% yr/yr to $391 mln. XRAY cites several headwinds, including foreign currency impacts, global supply chain challenges, and regional softness in the US and China.
XRAY expects FX to shave $300 mln in revenue and $0.30 in EPS for the full year 2022. For a company that guided to FY22 revs of $3.85-3.88 bln, that is a significant impact. Regarding China, XRAY continues to see prolonged impacts from COVID-related shutdowns.
The company also expects stronger global recessionary headwinds, particularly in the US and certain European markets. Due to higher consumer inflation, XRAY expects there will be a slowdown in elective procedures such as clear aligners and implants. Demand is likely to skew more towards more traditional procedures. XRAY believes this dynamic, coupled with higher interest rates, may reduce the demand for certain equipment in the coming months.
Dentsply Sirona has seen its share price fall precipitously from its high near $59 in late February to around $31 currently. Several EPS misses and the need to restate some results have taken a toll. The good news today is that the stock has moved nicely off its lows despite the large miss, which tells us a lot of negativity has been priced in. We would still be cautious on XRAY until it can show some better earnings results and we would wait to hear what direction the company will take after its comprehensive review.
