Dental stocks are gaining a lot of attention after a pandemic-battered 2020. This subsector, which majorly falls into the broader MedTech’s non-emergency category, is back in focus since the beginning of 2021 with patients gradually returning to receive dental services. The gradually-resuming practices are again attracting patients, who had refrained from availing services due to the fear of getting infected by the virus.
The dental practices currently gaining prominence are general dentistry, oral surgeries, orthodontics and prosthodontic services. Although primarily non-essential by nature, the limited scope of deferring critical services like endodontic treatments for cavities has resulted in a huge pent-up demand in the market following months of suppressed dental office visits. This is expected to further boost the market for dentistry in the coming months.
With dentistry resuming services and patients returning to avail services, it is the right time for investors to park their funds with key dental players. With a potential upside on this front, investors can safely place their bets on such players to reap long-term returns.
Let us delve deeper.
Dentistry Gaining Traction
After a tepid 2020, the dental space is garnering a lot of attention lately with gradual resumption of services. Interestingly, the dental sector has even secured space in the government’s budget allocation for fiscal 2022. The budget is aiming to improve access to dental coverage in Medicare, thus making it easier for eligible people to get and stay covered in Medicaid. As of now, Medicare does not cover dental cleanings or root canal services.
Per a report by The Business Research Company, the global dental services market that had a value of $365.6 billion in 2020, is expected to reach $551.9 billion in 2025 at a CAGR of 8.6%. The market is expected to get a significant thrust from the pandemic-led pent-up demand, when availing services were largely deferred along with technological advances being made in the field.
Realizing the potential in the dental space, key players like Patterson Companies, Inc. PDCO are strengthening their foothold in the niche space. The company reported robust fourth-quarter fiscal 2021 results, which was partly driven by its strength in its dental business. Patterson’s dental arm’s equipment and software, and consumable sub-segments also registered impressive growth.
4 Dental Stocks to Buy
Here we have picked four dental stocks from the MedTech space, which have been quite active on this front and have performed impressively in recent times. All the companies carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MedTech stalwart Henry Schein, Inc. HSIC in June acquired a majority (70%) ownership position in eAssist Dental Solutions (eAssist). In May, Henry Schein’s subsidiary, Henry Schein One, acquired a majority (80%) ownership position in Jarvis Analytics, a software company that develops comprehensive business analytics tools to help dental practitioners use data to diagnose problems, strengthen decision-making and improve business performance.
Its long-term expected earnings growth rate is pegged at 11.2%. The company is expected to report 2021 earnings and revenue growth of 35.7% and 15.9%, respectively. Year to date, the stock has gained 14.7% compared with the industry’s 10.6% rise.
Renowned provider of Invisalign system of clear aligners, Align Technology, Inc. ALGN, announced the new iTero Workflow 2.0 software release with advanced features in June. The software provides enhanced intraoral image sharpness for clearer hard and soft tissue details to aid in treatment diagnosis, while also driving practice efficiency, patient engagement, and a more seamless end-to-end digital treatment experience. In April, the company extended its relationship with DECA Dental Group and signed a new multi-year agreement for the Invisalign system through early 2025.
Its long-term expected earnings growth rate is pegged at 23.2%. The company is expected to report 2021 earnings and revenue growth of 100.6% and 53.4%, respectively. Year to date, the stock has gained 14.6% compared with the industry’s 10.6% rise.
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Straumann Holding AG SAUHF is a well-known player in tooth replacement and orthodontic solutions. The company reported first-quarter 2021 results in April, when it recorded solid organic growth. The company also recorded strong organic double-digit growth in all regions, led by EMEA and North America.
Its long-term expected earnings growth rate is pegged at 11%. The company is expected to report 2021 earnings and revenue growth of 72.7% and 30.8%, respectively. Year to date, the stock has gained 40.1% compared with the industry’s 10.6% rise.
Renowned manufacturer of professional dental products and technologies, DENTSPLY SIRONA Inc. XRAY, in June, announced that it has acquired substantially all of the assets of Propel Orthodontics, which includes the VPro device and the Fastrack Mobile App. DENTSPLY SIRONA reported robust first-quarter 2021 results in May, when it also registered strong organic revenue growth.
Its long-term expected earnings growth rate is pegged at 21.5%. The company is expected to report 2021 earnings and revenue growth of 59.8% and 27%, respectively. Year to date, the stock has gained 21.5% compared with the industry’s 10.6% rise.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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