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Thursday, Mizuho (NYSE:MFG) Securities updated their financial outlook on Henry Schein (NASDAQ:HSIC), increasing the price target to $78 from the previous $75, while maintaining a Neutral rating on the company’s stock. According to InvestingPro data, the company currently trades at a P/E ratio of 32.47, suggesting a premium valuation. The adjustment follows Henry Schein’s preliminary fourth-quarter 2024 results, which fell short of expectations, with revenues around $3.2 billion, not meeting the Street’s projection of $3.348 billion and Mizuho’s estimate of $3.248 billion. The company’s EBITDA also did not reach the anticipated $280 million, settling at $270 million, and earnings per share (EPS) of $1.19 were below the expected $1.23.
Henry Schein also provided initial guidance for the year 2025, forecasting revenue growth in the low single-digit to mid-single-digit (LSD-to-MSD) range, which aligns with the current market view of approximately 4% growth. However, the company’s projected EBITDA and EPS growth are both below the Street’s expectations of 7% and 8%, respectively.
Despite the underwhelming financial performance, Mizuho notes that the news of KKR’s strategic investment in Henry Schein could be seen in a positive light by the market. InvestingPro analysis shows the company maintains a GOOD overall financial health score, with particularly strong profitability metrics. The investment firm is set to make a 12% strategic investment in the healthcare supplies company and will obtain two seats on its board of directors. This move is expected to influence investor sentiment and could counterbalance the impact of the less-than-stellar earnings report.
In conclusion, while Henry Schein’s recent financial results and 2025 outlook may not have met analyst expectations, the involvement of KKR as a significant investor and board member may provide a positive counterweight. The stock has shown strong momentum with a 15.42% year-to-date return and trades near its 52-week high of $82.63. Mizuho’s updated price target reflects a cautious yet optimistic stance, taking into account both the financial data and the potential influence of the new investment. For deeper insights into Henry Schein’s valuation and growth prospects, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Henry Schein, a provider of healthcare solutions, has seen significant developments. Investment firm KKR has announced plans to increase its stake in Henry Schein by investing an additional $250 million, expanding its holdings in the company. Alongside this, two KKR representatives will join the Henry Schein board as independent directors, offering strategic guidance.
Henry Schein also reported preliminary unaudited results for the fourth quarter of 2024, with a GAAP diluted EPS of $0.74 and a non-GAAP diluted EPS of $1.19, slightly below the estimated $1.23. Looking ahead, the company is targeting low to mid single digit growth for its non-GAAP EPS in 2025.
In response to proposals from activist investor Ananym Capital Management, Mizuho has set a neutral rating for Henry Schein, while Piper Sandler has reaffirmed its Overweight rating. These are among the recent developments for the company.
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