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4 Stocks to Buy Amid Dental Supplies Industry Challenges
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The Zacks Medical - Dental Supplies industry in the Medical sector has shown a consolidating trend in 2024 amid a rise in product sales. The consolidation in the industry performance implies a growing enthusiasm among investors, which can lead to a sharp uptrend going forward. Investors are likely getting attracted to the stocks within this industry due to the recent uptick in the sale of dental products and services. This can be primarily linked to the lifting of limitations associated with the pandemic over the past few years.
Also, the major players in the industry have been taking cost-cutting and price improvement initiatives post the pandemic to improve their margins. Factors fueling the dental market include the prevalent incidence of oral health conditions, the demographic trend of an aging society, a growing interest in aesthetic dental treatments and advancements in dental technology. The sector is anticipated to continue its expansion as it evolves and introduces novel treatments and procedures to cater to the evolving healthcare needs of patients. Going by the Fortune Business Insight data, the global dental industry is expected to reach $95.37 billion by 2032 at a CAGR of 11.8% during 2023-2032.
However, the current high interest rate regime is likely to continue to increase the cost of capital. The Fed has kept the interest rates unchanged during its meeting earlier this month. Other macro headwinds, such as supply-chain constraints due to ongoing wars, are hurting the margins of the industry players.
Currently, the industry is in the bottom 32% out of more than 250 Zacks industries and a rally may occur after a break out of the consolidating range. However, here are a few industry participants like Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, McKesson (MCK - Free Report) , The Cooper Companies (COO - Free Report) and STAAR Surgical (STAA - Free Report) that have shown encouraging trends amid uncertain times and are likely to gain from the existing market opportunities.
Industry Description
The global dental industry consists of companies that design, develop, make and market dental products, such as consumables, laboratory products and specialty items. Some of these companies also offer software and systems for practice management, patient education and office administration. Dental stocks have been drawing attention amid a recovery in sales after the weakness faced due to the pandemic-induced disruptions. The market has been recovering and maintaining its position.
Notably, dental care is being provided based on the advice and recommendations of the American Dental Association and CDC. Thanks to the rebound seen by the companies in this space, patient volume has been increasing steadily despite the COVID-19 uncertainty.
Major Trends Shaping the Future of the Medical Dental Supplies Industry
Increasing Burden of Oral Diseases and an Aging Population: The dental equipment market in the United States is being driven by the country's growing geriatric population. This group is a significant demographic in dental surgeries and other dental practices. Per the U.S. Census Bureau, the country had 55.8 million people aged 65 and above in 2020. Old age increases the likelihood of dental issues such as cavities, root and coronal caries, and periodontitis. Consequently, the rising number of seniors in the country is a key contributor to the market’s growth.
Demand for Esthetic and Cosmetic Dentistry: The dental equipment market in the United States is growing due to the demand for esthetic and cosmetic dentistry. People, influenced by Internet strategies, current trends and media coverage, want to improve their dental appearance. Cosmetic dentistry, which started in the United States, has led to many innovations in the field. Patients in the country are looking for procedures that can enhance their smile, as well as restore dental function. This trend is boosting the growth of the U.S. dental equipment market.
Technological Advancements: Dental procedures are changing with new technologies like digital imaging, laser dentistry and CAD/CAM systems. These technologies make treatments more accurate and effective, leading to better results. Also, new materials have been developed that are stronger, more compatible and attractive, giving dental practitioners more options for supplies.
Zacks Industry Rank
The Zacks Medical Dental Supplies industry falls within the broader Zacks Medical sector.
It carries a Zacks Industry Rank #171, which places it in the bottom 32% of 251 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few dental supply stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Performance
The industry has underperformed its sector as well as the S&P 500 composite in the past year.
Stocks in this industry have collectively gained 1.4% compared with the Zacks Medical sector’s growth of 12.8%. The S&P 500 has increased 29.4% in the same time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing medical stocks, the industry is currently trading at 17.4X compared with the S&P 500’s 21.5X and the sector’s 23.4X.
Over the past five years, the industry has traded as high as 20.9X and as low as 15.6X, with the median being 20.3X, as the charts show.
Price-to-Earnings Forward Twelve Months (F12M)
Price-to-Earnings Forward Twelve Months (F12M)
4 Promising Dental Supply Stocks
The Cooper Companies is a specialty medical device company operating on a global basis. Cooper has two business segments — CooperVision (CVI) and CooperSurgical (CSI). CVI manufactures and sells a wide range of contact lenses. CVI develops, manufactures and markets a broad range of single-use, two-week and monthly contact lenses, featuring advanced materials and optics. CSI sells a variety of medical devices and surgical instruments that are primarily used by gynecologists and obstetricians. This strategic business unit has pursued a strategy of consolidation by acquiring critical treatment niches in a fragmented market.
The company’s top line improved during the third quarter of fiscal 2024, driven by solid segmental performances. Higher Contract Manufacturing component sales and continued demand for NovaPure and self-injection device platforms look promising. The expansion of both margins bodes well for the stock.
COO expects EPS to be in the $3.64-$3.67 range for 2024, up from the prior outlook of $3.54-$3.60. Meanwhile, the recent launch of the company’s new culture and transfer media in Europe, the new FastTrack genomics testing, and its premier cryo management software — embryo options — which was recently launched in targeted European countries buoy optimism.
The Zacks Consensus Estimate for fiscal 2025 revenues indicates growth of 7.4% from the year-ago reported figure, while the same for earnings implies an improvement of 11.4%. COO has a trailing four-quarter average earnings surprise of 3.87%. It carries a Zacks Rank #2 (Buy) at present.
Price and Consensus: COO
STAAR Surgical designs, develops, manufactures, and sells implantable lenses (for the eye) and accessory delivery systems used to deliver the lenses into the eye. The company is aleading manufacturer of phakic implantable lenses used worldwide in corrective surgery. It generates revenues almost exclusively from sales of its implantable collamer lenses (ICL) globally.
STAA’s growth strategy includes making a complete ICL product line available in its existing geographic markets and expanding into attractive markets. In addition, the company conducts awareness programs on the ICL procedure and the clinical benefits of ICLs. It also provides training, support and education to surgeons, particularly in newer markets, to drive adoption.
The company’s top line gained 7% in the second quarter. The upside was driven by revenue growth across the regions from strong year-over-year volume growth across all regions. Gross margin in the second quarter was favorably impacted, primarily due to changes in reserves related to cataract IOLs in the prior-year quarter. The company exited its cataract IOL business in fiscal 2023. It expects total revenue growth of 5.5-7% for 2024. STAA projects EVO ICL sales growth in the Americas of 15%, including 25% in the United States, 6% in EMEA and 7% in APAC, including approximately 10% in China.
The Zacks Consensus Estimate for 2024 revenues indicates year-over-year growth of 6.6%, while earnings estimates suggest a decline of 30.4%. Currently, the company carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: STAA
BD: It is a medical technology company, engaged principally in the development, manufacture and sale of medical devices, instrument systems and reagents. BD’s operations consist of three business segments — BD Medical, BD Life Sciences and BD Interventional.
BD Medical produces a broad array of medical technologies and devices to help improve healthcare delivery in a wide range of settings. BD Life Sciences provides products for the safe collection and transport of diagnostics specimens, instruments and reagent systems to detect a broad range of infectious diseases, healthcare-associated infections and cancers. BD Interventional provides vascular, urology, oncology and surgical specialty products.
Solid top-line results during the fiscal third quarter, along with improvements in organic revenues and bottom-line performances, were impressive. Robust performances by all segments and both geographic regions (on an adjusted basis) were encouraging. BD’s domestic revenues were also up on a reported basis, while International revenues were up at CER, which were also impressive. Strength in most of BD’s segments' business units during the reported quarter was also promising. The expansion of both margins bodes well.
However, BD’s lower-than-expected revenues and lower International revenues on a reported basis were discouraging. The company expects adjusted earnings per share (EPS) to be in the range of $13.05-$13.15 for fiscal 2025, implying a year-over-year improvement of 6.9-7.7%. Revenues are expected to grow 15-17% compared with the fiscal 2024 level.
For this Franklin Lakes, CA-based company, the Zacks Consensus Estimate for fiscal 2025 revenues indicates growth of 6.4% from the prior-year reported figure, while the same for earnings implies an increase of 8.8%. BD has a trailing four-quarter average earnings surprise of 6.24%. Presently, the company carries a Zacks Rank #3 (Hold).
Price and Consensus: BDX
McKesson: A healthcare services and information technology company, McKesson operates through two segments. The Distribution Solutions segment distributes branded and generic pharmaceutical drugs, along with other healthcare-related products worldwide. The segment also provides practice management, technology, clinical support and business solutions to community-based oncology and other specialty practices. It also provides specialty pharmaceutical solutions for pharmaceutical manufacturers. The Technology Solutions segment provides enterprise-wide clinical, patient care, financial, supply-chain and strategic management software solutions.
The company recorded a significant uptick in its overall top line during the first quarter. This growth was primarily driven by the U.S. Pharmaceutical segment, which saw increased prescription volumes, including higher volumes from specialty products, retail national account customers and GLP-1 medications. Investors seem to be optimistic regarding the updated earnings guidance. On the first-quarter 2025 earnings call, McKesson raised its adjusted earnings per share (EPS) guidance for the financial year. It now expects adjusted EPS to be in the range of $31.75-$32.55 (previously $31.25-$32.05), which represents growth of 16-19% from the prior-year level. Revenues are expected to grow 15-17% from the prior-year figure.
For this San Francisco, CA-based company, the Zacks Consensus Estimate for fiscal 2025 revenues indicates growth of 14.4% year over year, while the same for earnings implies an increase of 16.8%. McKesson has a trailing four-quarter average earnings surprise of 4.82%. Presently, the company carries a Zacks Rank of 3.
Price and Consensus: MCK
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4 Stocks to Buy Amid Dental Supplies Industry Challenges
The Zacks Medical - Dental Supplies industry in the Medical sector has shown a consolidating trend in 2024 amid a rise in product sales. The consolidation in the industry performance implies a growing enthusiasm among investors, which can lead to a sharp uptrend going forward. Investors are likely getting attracted to the stocks within this industry due to the recent uptick in the sale of dental products and services. This can be primarily linked to the lifting of limitations associated with the pandemic over the past few years.
Also, the major players in the industry have been taking cost-cutting and price improvement initiatives post the pandemic to improve their margins. Factors fueling the dental market include the prevalent incidence of oral health conditions, the demographic trend of an aging society, a growing interest in aesthetic dental treatments and advancements in dental technology. The sector is anticipated to continue its expansion as it evolves and introduces novel treatments and procedures to cater to the evolving healthcare needs of patients. Going by the Fortune Business Insight data, the global dental industry is expected to reach $95.37 billion by 2032 at a CAGR of 11.8% during 2023-2032.
However, the current high interest rate regime is likely to continue to increase the cost of capital. The Fed has kept the interest rates unchanged during its meeting earlier this month. Other macro headwinds, such as supply-chain constraints due to ongoing wars, are hurting the margins of the industry players.
Currently, the industry is in the bottom 32% out of more than 250 Zacks industries and a rally may occur after a break out of the consolidating range. However, here are a few industry participants like Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, McKesson (MCK - Free Report) , The Cooper Companies (COO - Free Report) and STAAR Surgical (STAA - Free Report) that have shown encouraging trends amid uncertain times and are likely to gain from the existing market opportunities.
Industry Description
The global dental industry consists of companies that design, develop, make and market dental products, such as consumables, laboratory products and specialty items. Some of these companies also offer software and systems for practice management, patient education and office administration. Dental stocks have been drawing attention amid a recovery in sales after the weakness faced due to the pandemic-induced disruptions. The market has been recovering and maintaining its position.
Notably, dental care is being provided based on the advice and recommendations of the American Dental Association and CDC. Thanks to the rebound seen by the companies in this space, patient volume has been increasing steadily despite the COVID-19 uncertainty.
Major Trends Shaping the Future of the Medical Dental Supplies Industry
Increasing Burden of Oral Diseases and an Aging Population: The dental equipment market in the United States is being driven by the country's growing geriatric population. This group is a significant demographic in dental surgeries and other dental practices. Per the U.S. Census Bureau, the country had 55.8 million people aged 65 and above in 2020. Old age increases the likelihood of dental issues such as cavities, root and coronal caries, and periodontitis. Consequently, the rising number of seniors in the country is a key contributor to the market’s growth.
Demand for Esthetic and Cosmetic Dentistry: The dental equipment market in the United States is growing due to the demand for esthetic and cosmetic dentistry. People, influenced by Internet strategies, current trends and media coverage, want to improve their dental appearance. Cosmetic dentistry, which started in the United States, has led to many innovations in the field. Patients in the country are looking for procedures that can enhance their smile, as well as restore dental function. This trend is boosting the growth of the U.S. dental equipment market.
Technological Advancements: Dental procedures are changing with new technologies like digital imaging, laser dentistry and CAD/CAM systems. These technologies make treatments more accurate and effective, leading to better results. Also, new materials have been developed that are stronger, more compatible and attractive, giving dental practitioners more options for supplies.
Zacks Industry Rank
The Zacks Medical Dental Supplies industry falls within the broader Zacks Medical sector.
It carries a Zacks Industry Rank #171, which places it in the bottom 32% of 251 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all member stocks, indicates bright near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperforms the bottom 50% by a factor of more than 2 to 1.
Before we present a few dental supply stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
Industry Performance
The industry has underperformed its sector as well as the S&P 500 composite in the past year.
Stocks in this industry have collectively gained 1.4% compared with the Zacks Medical sector’s growth of 12.8%. The S&P 500 has increased 29.4% in the same time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing medical stocks, the industry is currently trading at 17.4X compared with the S&P 500’s 21.5X and the sector’s 23.4X.
Over the past five years, the industry has traded as high as 20.9X and as low as 15.6X, with the median being 20.3X, as the charts show.
Price-to-Earnings Forward Twelve Months (F12M)
Price-to-Earnings Forward Twelve Months (F12M)
4 Promising Dental Supply Stocks
The Cooper Companies is a specialty medical device company operating on a global basis. Cooper has two business segments — CooperVision (CVI) and CooperSurgical (CSI). CVI manufactures and sells a wide range of contact lenses. CVI develops, manufactures and markets a broad range of single-use, two-week and monthly contact lenses, featuring advanced materials and optics. CSI sells a variety of medical devices and surgical instruments that are primarily used by gynecologists and obstetricians. This strategic business unit has pursued a strategy of consolidation by acquiring critical treatment niches in a fragmented market.
The company’s top line improved during the third quarter of fiscal 2024, driven by solid segmental performances. Higher Contract Manufacturing component sales and continued demand for NovaPure and self-injection device platforms look promising. The expansion of both margins bodes well for the stock.
COO expects EPS to be in the $3.64-$3.67 range for 2024, up from the prior outlook of $3.54-$3.60. Meanwhile, the recent launch of the company’s new culture and transfer media in Europe, the new FastTrack genomics testing, and its premier cryo management software — embryo options — which was recently launched in targeted European countries buoy optimism.
The Zacks Consensus Estimate for fiscal 2025 revenues indicates growth of 7.4% from the year-ago reported figure, while the same for earnings implies an improvement of 11.4%. COO has a trailing four-quarter average earnings surprise of 3.87%. It carries a Zacks Rank #2 (Buy) at present.
Price and Consensus: COO
STAAR Surgical designs, develops, manufactures, and sells implantable lenses (for the eye) and accessory delivery systems used to deliver the lenses into the eye. The company is aleading manufacturer of phakic implantable lenses used worldwide in corrective surgery. It generates revenues almost exclusively from sales of its implantable collamer lenses (ICL) globally.
STAA’s growth strategy includes making a complete ICL product line available in its existing geographic markets and expanding into attractive markets. In addition, the company conducts awareness programs on the ICL procedure and the clinical benefits of ICLs. It also provides training, support and education to surgeons, particularly in newer markets, to drive adoption.
The company’s top line gained 7% in the second quarter. The upside was driven by revenue growth across the regions from strong year-over-year volume growth across all regions. Gross margin in the second quarter was favorably impacted, primarily due to changes in reserves related to cataract IOLs in the prior-year quarter. The company exited its cataract IOL business in fiscal 2023. It expects total revenue growth of 5.5-7% for 2024. STAA projects EVO ICL sales growth in the Americas of 15%, including 25% in the United States, 6% in EMEA and 7% in APAC, including approximately 10% in China.
The Zacks Consensus Estimate for 2024 revenues indicates year-over-year growth of 6.6%, while earnings estimates suggest a decline of 30.4%. Currently, the company carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Price and Consensus: STAA
BD: It is a medical technology company, engaged principally in the development, manufacture and sale of medical devices, instrument systems and reagents. BD’s operations consist of three business segments — BD Medical, BD Life Sciences and BD Interventional.
BD Medical produces a broad array of medical technologies and devices to help improve healthcare delivery in a wide range of settings. BD Life Sciences provides products for the safe collection and transport of diagnostics specimens, instruments and reagent systems to detect a broad range of infectious diseases, healthcare-associated infections and cancers. BD Interventional provides vascular, urology, oncology and surgical specialty products.
Solid top-line results during the fiscal third quarter, along with improvements in organic revenues and bottom-line performances, were impressive. Robust performances by all segments and both geographic regions (on an adjusted basis) were encouraging. BD’s domestic revenues were also up on a reported basis, while International revenues were up at CER, which were also impressive. Strength in most of BD’s segments' business units during the reported quarter was also promising. The expansion of both margins bodes well.
However, BD’s lower-than-expected revenues and lower International revenues on a reported basis were discouraging. The company expects adjusted earnings per share (EPS) to be in the range of $13.05-$13.15 for fiscal 2025, implying a year-over-year improvement of 6.9-7.7%. Revenues are expected to grow 15-17% compared with the fiscal 2024 level.
For this Franklin Lakes, CA-based company, the Zacks Consensus Estimate for fiscal 2025 revenues indicates growth of 6.4% from the prior-year reported figure, while the same for earnings implies an increase of 8.8%. BD has a trailing four-quarter average earnings surprise of 6.24%. Presently, the company carries a Zacks Rank #3 (Hold).
Price and Consensus: BDX
McKesson: A healthcare services and information technology company, McKesson operates through two segments. The Distribution Solutions segment distributes branded and generic pharmaceutical drugs, along with other healthcare-related products worldwide. The segment also provides practice management, technology, clinical support and business solutions to community-based oncology and other specialty practices. It also provides specialty pharmaceutical solutions for pharmaceutical manufacturers. The Technology Solutions segment provides enterprise-wide clinical, patient care, financial, supply-chain and strategic management software solutions.
The company recorded a significant uptick in its overall top line during the first quarter. This growth was primarily driven by the U.S. Pharmaceutical segment, which saw increased prescription volumes, including higher volumes from specialty products, retail national account customers and GLP-1 medications. Investors seem to be optimistic regarding the updated earnings guidance. On the first-quarter 2025 earnings call, McKesson raised its adjusted earnings per share (EPS) guidance for the financial year. It now expects adjusted EPS to be in the range of $31.75-$32.55 (previously $31.25-$32.05), which represents growth of 16-19% from the prior-year level. Revenues are expected to grow 15-17% from the prior-year figure.
For this San Francisco, CA-based company, the Zacks Consensus Estimate for fiscal 2025 revenues indicates growth of 14.4% year over year, while the same for earnings implies an increase of 16.8%. McKesson has a trailing four-quarter average earnings surprise of 4.82%. Presently, the company carries a Zacks Rank of 3.
Price and Consensus: MCK