Patterson Shares Rally As One Analyst Suggests Partnership With Amazon

Northcoast Research thinks investors should consider building up positions in Patterson Companies, Inc. PDCO shares, citing improving industry trends. The firm believes the growth trend is due to normalize in the December quarter. Its research suggested the dental equipment market is beginning to heat up, with the doctors focusing more on digital.

Analyst Ed Snyder thinks the growth is supported by Section 179 tax incentives. Therefore, he reiterated his Buy rating on Patterson Companies shares. The analyst thinks that the sell-off in dental shares offers a good opportunity to build positions over the long term. He cited the leading indicators that showed improvements. For instance, patient traffic was strong in September and October on a year-over-year basis than the June–August period on a year-over-year basis.

The brokerage said the September quarter growth would remain weak and is not worried about it. Although Patterson is expected to announce its results toward the last part of the current month, the firm expects dental consumable internal growth pace of about 1.8 percent in the second quarter of fiscal year 2017.

“More importantly, we believe future growth commentary could be more bullish due to better industry growth visibility, improving equipment performance, and the Heartland contract win which could add 120 basis points to total dental internal growth in calendar 2017,” the analyst said in a research note.

The firm wants the company to partner with Amazon.com, Inc. AMZN to reinvent the dental distribution in the future. Last month, UBS initiated with a Neutral rating.

At last check, Patterson traded up by 2.47 percent at $43.76, while Amazon had lost 1.47 percent on the day to trade at $778.22.