Henry Schein, Inc. (HSIC Quick QuoteHSIC - Free Report) has been gaining from its strategic acquisitions and partnerships. Strong potential in the company’s dental technology joint venture (JV), Henry Schein One, buoys optimism. Meanwhile, favorable trends in the end markets position the company well for further growth.

Over the past six months, the stock has gained 20.4% compared with the 16.7% growth of the industry and the 11% rise of the S&P 500 composite.

The renowned global distributor of healthcare products and services has a market capitalization of $10.81 billion. Its fourth-quarter 2022 earnings were in-line with the Zacks Consensus Estimate.

Courtesy of solid prospects, this Zacks Rank #1 (Strong Buy) stock is an attractive pick for investors at the moment.

Factors at Play

Market Dynamics: Henry Schein stands to gain from several favorable trends in the end markets. One of the major positives is demographics. The increasing number of lives covered, following the healthcare reforms in the United States is likely to benefit the company.

We believe that an aging population and increasing healthcare expenditure across the globe will aid in providing additional top-line opportunities. Further, the company’s medical segment continues to grow as it gains traction in large group practices including those within health systems.

Moreover, Henry Schein is upbeat about the expected increase in dental insurance coverage along with lower insurance reimbursement rates leading to a rising need for new technologies. We believe this will boost demand for its products and services as well.

Henry Schein One Holds Potential: Henry Schein seems to be optimistic about its dental technology JV Henry Schein One. The dental software business has been progressing well, despite a challenging business environment.

During the fourth quarter, Henry Schein One registered solid sales growth domestically and internationally, supported by its Dentrix practice management software and Dendrix Ascend and entirely cloud-based solutions. The company now has close to 6000 cloud-based customers. In the past few months, it launched entirely across the United Kingdom, and in Australia and New Zealand, and remains on track for further geographic expansion in 2023.

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Earlier, Henry Schein announced that Dentrix Ascend was selected as the exclusive cloud-based practice management system for small brands, a dental service organization, and a DSO organization with more than 700 locations, reflecting the competitive advantage of this product offering.

Expansion Through Acquisitions and Partnerships: Henry Schein’s revenue growth has been consistently supported by niche acquisitions and partnerships. Its robust acquisition strategy helps it to pursue targets that provide access to additional product lines.

During the fourth quarter, the company acquired Midway Dental in the United States and Condor Dental in Switzerland, expanding its reach into underpenetrated areas in the market.

In January 2023, Henry Schein’s subsidiary, eAssist Dental Solutions (eAssist), acquired a majority interest in Unitas PPO Solutions (Unitas). Unitas is a privately-held service provider that works with dental practices to assess their commercial insurance participation, set competitive fee-for-service rates and negotiate contracted reimbursement with commercial insurers (PPO plans). The acquisition advances and accelerates the development of value-added services offered by Henry Schein Dental and further fortifies the company’s commitment to be a trusted advisor to customers.

Upbeat Guidance: For 2023, the company expects adjusted earnings per share in the range of $5.25-$5.42 (excluding amortization expense of acquired intangible assets). This implies growth of (2%) to 1% from the 2022 figure. The Zacks Consensus Estimate for the metric is currently pegged at $4.95.

For 2023, Henry Schein expects sales growth of nearly 1-3% over 2022. The Zacks Consensus Estimate for revenues is currently pegged at $12.83 billion.

Estimate Trend

The company has been witnessing a positive estimate revision trend for 2023. Over the past 90 days, the Zacks Consensus Estimate for its 2023 earnings has moved 6.8% north to $5.32.

The Zacks Consensus Estimate for 2023 revenues is pegged at $12.84 billion, suggesting a 1.5% rise from the 2022 reported figure.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Hologic, Inc. (HOLX Quick QuoteHOLX - Free Report) , Becton, Dickinson and Company (BDX Quick QuoteBDX - Free Report) and Avanos Medical, Inc. (AVNS Quick QuoteAVNS - Free Report) .

Hologic, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 15.2%. HOLX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 30.6%.
You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic has gained 12% against the industry’s 10.7% fall in the past year.

Becton, Dickinson and Company, carrying a Zacks Rank #2 at present, has an estimated long-term growth of 7.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.47%.

So far this year, BDX’s shares have lost 1.8% compared with the industry’s 2.1% fall.

Avanos, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1.8% for 2023. AVNS’ earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.

Avanos has lost 3.7% compared with the industry’s 10.8% decline in the past year.