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On Friday, DENTSPLY SIRONA (NASDAQ:XRAY) shares experienced a significant drop, falling 8.8% compared to the S&P 500’s decline of 1.6%. This downward movement came in response to the company’s first-quarter guidance, which was revealed during their conference call. UBS analyst Kevin Caliendo reaffirmed a Buy rating on the stock, maintaining a price target of $27.00. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculation, with analyst targets ranging from $19 to $27.
Caliendo pointed out that the market’s negative reaction was largely due to the unexpected soft first-quarter expectations. DENTSPLY SIRONA forecasted a high-single-digit percentage organic revenue decline year-over-year for the first quarter, with adjusted EBITDA margin and earnings per share expected to remain flat sequentially. The company’s performance in the fourth quarter was notably low, setting a depressed base for comparison.
The analyst attributed the anticipated decline to challenges faced by Byte and obstacles impacting sales of Clear Aligner Therapy Systems (CTS (NYSE:CTS)) in the U.S. market. He noted that the fixed costs associated with CTS could lead to significant EBIT margin volatility depending on sales volumes. This is especially relevant considering the tough comparison against the previous year’s first quarter when CAD/CAM dealer inventory levels were lower, resulting in a projected negative segment EBIT for the first quarter in UBS’s model.
Caliendo explained that the forecasted improvements throughout the year would be driven by the timing of equipment sales, which is influenced by the nature of the company’s cost base. Despite the soft guidance for the first quarter, UBS’s stance on DENTSPLY SIRONA remains positive with the expectation that the company will achieve its full-year guidance. While the company wasn’t profitable in the last twelve months, analysts predict profitability this year with an EPS forecast of $1.88 for FY2025. For deeper insights into DENTSPLY SIRONA’s financial health and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with detailed analysis and actionable intelligence.
In other recent news, Dentsply Sirona reported its fourth-quarter 2024 earnings, which showed a mixed performance. The company recorded an earnings per share (EPS) of $0.44, slightly exceeding the forecast of $0.43, but revenue fell short, coming in at $905 million compared to the expected $922.82 million. This represented a 10.6% decline in reported sales year-over-year. Additionally, the company announced a 4.3% decrease in full-year sales to $3.79 billion, reflecting broader market pressures and internal challenges. In light of these results, Needham analysts adjusted their price target for Dentsply Sirona, lowering it to $23.00 from $25.00, while maintaining a Buy rating on the stock.
Dentsply Sirona’s management expressed confidence in their 2025 guidance, projecting an organic sales decline of 2-4% and an EBITDA margin exceeding 18%. The company is also exploring strategic alternatives for its Wellspect Healthcare business, aiming to unlock value for stakeholders. Despite challenges, digital dentistry remains a focus for growth, with new product launches and increased user engagement. The company’s SureSmile and Wellspect product lines are expected to drive future growth, supported by strategic initiatives and cost structure optimizations.
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