On Aug 31, 2015, we issued an updated research report on Henry Schein Inc. HSIC, a leading distributor of health care products and services across the globe. Henry Schein delivered a disappointing second-quarter 2015 with earnings and revenues lagging the respective Zacks Consensus Estimate. However, the year-over-year improvement on both fronts is indicative of the company's consistent growth via organic and inorganic means across most of its segments.
We are, at the same time, encouraged by the company’srevenue growth through niche acquisitions. During the second quarter, Henry Schein announced two acquisitions in the animal health space to expand its direct presence in the global market. First, management plans to acquire a majority interest in Jorgen Kruuse, which will extend Henry Schein's direct presence in Denmark, Norway, and Sweden – the Nordic animal health market.
Later, Henry Schein intends to expand the Kruuse line of proprietary products to animal health customers across Europe, North America, Australia and New Zealand as well as Asia. Also, during the reported quarter, the company acquired a 50% ownership investment in Maravet – a leading animal health distributor in Romania. This investment in Maravet will boost Henry Schein’s East European presence.
Currently, management is investing in growth opportunities that will enable Henry Schein to introduce new product categories, improve operating margin by enhancing operational inefficiencies, and develop new technology solutions and other value-added services that will improve the customer experience and elevate the company’s position in the marketplace.
Total sales growth in the quarter was, however, negatively impacted by unfavorable foreign currency fluctuations. In addition, the overall macroeconomic uncertainty remains an overhang. Tough competition also warrants caution.
The stock currently carries a Zacks Rank #3 (Hold).
Key Picks in the Sector
Better-ranked stocks that warrant a look in the broader medical sector include DENTSPLY International Inc. XRAY, CR Bard Inc. BCR and Laboratory Corp. of America Holdings LH. All these stocks carry a Zacks Rank #2 (Buy).
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