Henry Schein stock downgraded by Stifel on market share concerns

Investing.com - Stifel downgraded Henry Schein (NASDAQ:HSIC) from Buy to Hold on Friday, while lowering its price target to $75.00 from $80.00, citing concerns about market share losses. According to InvestingPro data, the $8.84B market cap company is currently trading near its Fair Value, with a P/E ratio of 22.44.

The downgrade is based on five key factors, including diligence identifying future U.S. share losses for Henry Schein’s consumables business, primarily to online solutions. Stifel’s research suggests this multi-year share shift to online competitors will continue for the foreseeable future. The company has maintained profitability, generating $12.67B in revenue over the last twelve months.

Despite these market share concerns, Stifel notes the stock currently trades at a slight premium to its three-year average relative to the XLV healthcare sector ETF. The firm also expressed skepticism about near-term cost-cutting opportunities following KKR’s increased presence, pointing out that Henry Schein has already undergone three restructurings in the past five years. InvestingPro analysis shows the company maintains a GOOD financial health score, though it’s trading at a high P/E ratio relative to near-term earnings growth. Discover more insights with InvestingPro’s comprehensive research report.

Stifel’s industry checks also identified risks with Henry Schein’s biggest customer, Heartland Dental. Recent conversations indicate a higher probability that at least some portion of Heartland’s revenue could move to another provider in coming quarters.

The downgrade reflects growing competitive pressures in the dental supply market, particularly from online channels that continue to gain traction against traditional distributors like Henry Schein.

In other recent news, Henry Schein Inc. reported its first-quarter 2025 earnings, which showed a modest beat on earnings per share (EPS) but did not meet revenue expectations. Additionally, Henry Schein has finalized a $250 million investment from KKR, resulting in KKR acquiring a 12% stake in the company. This strategic partnership also led to the appointment of two new independent directors to Henry Schein’s Board. Meanwhile, Baird downgraded Henry Schein’s stock rating from Outperform to Neutral, citing potential concerns over the possible loss of Heartland Dental as a major customer. In shareholder-related news, Henry Schein’s recent meeting saw the approval of executive pay and the election of new directors. Shareholders voted in favor of the "say-on-pay" proposal, which involves non-binding approval of executive compensation. These developments reflect a period of significant change and strategic moves for Henry Schein.

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