UBS Says Take Advantage Of Recent Weakness In Patterson Cos.; Upgrades To Buy

UBS issued a company note on Patterson Companies, Inc. (NASDAQ: PDCO) after the UBS Global Dental Survey was released, suggesting that industry growth in the United States can accelerate in 2016. UBS upgraded Patterson Companies from Neutral to Buy and raised their price target from $49 to $50. Steven Valiquette, a research analyst at UBS, wrote, "Patterson remains the sole publicly-traded US-focused dental company, so PDCO should have the most leverage to robust US dental trends...Based on our Global Dental Survey, respondents are currently expecting a strong uptick in overall patient volumes and spending on consumables/equipment. Importantly, 94 percent of our respondents indicated that their patient volume forecasts are growing in-line or above current industry trends."UBS highlighted two points which could drive Patterson Companies' stock higher in 2016.1. Top line growth opportunitiesAnalysts at UBS expect domestic demand for dental services to increase as customers have more disposable income. This has the potential to drive demand for Patterson's dental equipment and grow the company's revenue. Furthermore, Patterson cites their study that patient volume growth can accelerate to 7 percent in 2016, which should benefit Patterson because they are one of the largest dental equipment providers in the country with a strong network of dental practices as customers.2. Pricing PowerDue to Patterson's operational strength and sizable market share, analyst believe that Patterson has the opportunity to expand their margins in 2016 as demand for their dental equipment increases. Furthermore, Patterson has strong relationships in the industry which should further drive profitability with the expected growth rate of patient volume. Patterson Companies last traded at $40.70.