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Henry Schein Inc HSIC

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HSIC Shares Caught in Pandemic Draft With Mix Shift and Recovery Uncertainty; Maintaining $68 FVE

Soo Romanoff Equity Analyst

Analyst Note

| Soo Romanoff |

Despite the perfect storm with a decline in equipment sales with unexpected sourcing changes and extreme operational changes with the conversion of certain warehouse to aid the U.S. government COVID-19 testing response, no-moat Henry Schein reported fourth-quarter results largely as expected. The roughly 8% intraday decline in shares, however, was a reflection of the 2021 guidance calling for a normalized EPS floor of the $3.51 as reported in 2019. This guidance comes across as extremely conservative as there should only be upside as visits and procedures resume as normal. We view the market reaction and conservative guidance to be extreme, as dental and medical providers will continue to lean on leading distributor partners to procure highly demanded items through the extended recovery as well as seek more comprehensive IT solutions. We maintain our $68 fair value estimate.

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Company Profile

Business Description

Henry Schein is the largest wholesaler of dental and medical products to office-based practitioners. The company has been established for approximately 90 years and operates across nearly 30 distribution centers to offer hundreds of thousands of products to customers globally. Henry Schein also offers practice management products that include software products, technical, financial, and educational services. The company recently spun off its animal health business.

135 Duryea Road
Melville, NY, 11747
T +1 631 843-5500
Sector Healthcare
Industry Medical Distribution
Most Recent Earnings Dec 31, 2020
Fiscal Year End Dec 29, 2020
Stock Type Slow Growth
Employees 19,000