We upgrade our recommendation on DENTSPLY International (XRAY) to Outperform based on our improved visibility on the stock. Its second-quarter fiscal 2011 revenues and earnings topped the Zacks Consensus Estimates. Revenues and profit were boosted by internal growth and a foreign exchange tailwind.
The company beefed up its earnings guidance for fiscal 2011 based on a stable-to-improving market conditions. DENTSPLY should benefit from the gradual recovery in the global dental market. The company's diversified product range and significant investment in product innovation should help it expand its share of the dental implant market.
Moreover, the acquisition of Astra Tech has reinforced its foothold in the global dental market and provided opportunities for attractive synergies. We also feel that the stock offers attractive upside potential at the current level.
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