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On Thursday, DENTSPLY SIRONA Inc. (NASDAQ:XRAY) shares faced a downgrade in stock rating by Jefferies from Buy to Hold, with a significant reduction in the price target to $20.00 from the previous $30.00. The firm's analysts cited a notably negative shift in sentiment towards the company, pointing out that the stock is currently trading at the lowest valuation within its dental sector peers. Currently trading at $19.36, the stock sits near its 52-week low of $17.21, having declined 44% over the past year. According to InvestingPro analysis, DENTSPLY SIRONA appears undervalued at current levels.
The downgrade comes amid a mix of broader economic concerns and specific challenges faced by DENTSPLY SIRONA. Jefferies highlighted issues such as the company's venture into the Byte business and ongoing regulatory investigations as key factors likely to limit the stock's performance in the near term. The analysts believe these particular issues will contribute to the stock remaining rangebound, prompting the lowered expectations. The company maintains a "FAIR" overall financial health score on InvestingPro, with solid gross profit margins of 52.2% despite revenue challenges.
The revised price target of $20.00 represents a significant decrease from the previous target of $30.00, reflecting the analysts' adjusted outlook on the company's future share value. Jefferies' decision to downgrade the stock is rooted in the current market dynamics and internal challenges that DENTSPLY SIRONA is confronting.
In their commentary, Jefferies analysts elaborated on their position, stating, "Sentiment has become very negative and shares trade at the lowest valuation in the dental peer group. In addition to the macro concerns, XRAY has a number of company-specific issues (i.e. Byte, regulatory investigation) that we believe will keep shares rangebound. Given the limited visibility, we are lowering our rating to Hold (from Buy) and our PT to $20 (from $30)."
Investors and market watchers are keeping a close eye on DENTSPLY SIRONA's performance and how these factors will impact the company's stock in the coming period. The lowered price target and rating downgrade serve as indicators of the challenges that lie ahead for the dental equipment and supplies manufacturer. With a market cap of $3.85 billion and a dividend yield of 3.3%, the stock maintains broader analyst coverage with targets ranging from $20 to $30. For deeper insights into DENTSPLY SIRONA's valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which includes detailed analysis of the company's financial health and future potential.
In other recent news, Dentsply, a dental implants manufacturer, announced a strategic shift in its business model, discontinuing sales of at-home teeth straightening products, Byte Aligners and Impression Kits. The company plans to refocus Byte to include in-person dentist oversight, marking a departure from its previous emphasis on at-home dental care. Evercore ISI analysts reacted to these developments by downgrading Dentsply Sirona's stock from Outperform to In Line, influenced by uncertainties surrounding the Byte business and a slower-than-expected turnaround in its implant and equipment sector.
Additionally, Dentsply Sirona appointed Herman V. Cueto as the Interim Chief Financial Officer, a move that comes amid challenges faced by the company. The company's third-quarter financial results showed a modest organic sales increase of 1.3%, reaching a revenue of $951 million. However, the voluntary suspension of sales and marketing for Byte aligners and impression kits led to a $500 million non-cash goodwill impairment charge and a decrease in EBITDA margins. Despite these challenges, the company's adjusted earnings per share rose by 3% to $0.50. These recent developments highlight Dentsply Sirona's strategic shifts and ongoing efforts to navigate its current landscape.
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