Henry Schein's Transition From Distributor To Manufacturer Spurs Upgrade - This Analyst Sees Easing Headwinds

Stifel analyst Jonathan D. Block upgraded health care products distributor Henry Schein Inc HSIC to Buy from Hold and maintained a price target of $70.

The analyst is bullish as the impact of several multi-year headwinds, including the pace of practice consolidation and loss of market share to pure online providers, are diminishing. 

Although the recent (and ongoing) cybersecurity incident is of concern, the analyst says that near-term resolution can modestly impact market share and drive FY24 EPS estimates close to FY23 current guidance (~$5.27 at midpoint). 

Block notes that HSIC’s business model is in a stronger position vs. last year as it continues to transform into more of a manufacturer rather than solely a distributor company and expects it to increase further with the recent acquisitions of S.I.N. and Biotech Dental.

The analyst estimates revenue and EPS of $12.80 billion and $5.22 for FY23 and $13.42 billion and $5.59 for FY24. 

The company will report Q3 FY23 results on November 13, 2023

Price Action: HSIC shares are trading higher by 2.25% at $63.56 on the last check Friday. 

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