Should You Retain Henry Schein Stock in Your Portfolio Right Now?

Henry Schein, Inc.’s HSIC joint venture, Henry Schein One, is driving strong growth in its core products and introducing new solutions. The company’s robust acquisition strategy helps it to pursue targets that provide access to additional product lines. Meanwhile, investors are concerned about headwinds, such as a sluggish macroeconomic scenario and intense competition, which could affect Henry Schein’s operations.

In the past year, this Zacks Rank #3 (Hold) stock rose 15.3% compared with the industry’s 1.1% growth. The S&P 500 composite rose 12.3% in the same time frame.

The leading distributor of healthcare products and services has a market capitalization of $9.31 billion. Henry Schein beat on earnings in each of the trailing four quarters, delivering an average surprise of 2.40%.

Tailwinds for HSIC Stock

Henry Schein One Holds Potential: Henry Schein seems upbeat about its dental technology joint venture, Henry Schein One. The dental software business has been progressing well, driving robust gains across its core products, including practice management software, revenue cycle management, analytics and AI solutions.

During the first quarter, Henry Schein One’s practice management software and revenue cycle management products posted growth, overcoming the impact of Change Healthcare’s cyber incident. In line with this, the company has over 9,500 customers subscribed to its Dentrix Ascend and Dentally, with year-on-year growth of nearly 20%.

During 2024, Henry Schein One made several developments, including the partnership with Bridge, a patient engagement technology provider, to develop and launch the axiUm Engage platform in 2025. Additionally, the company announced the availability of a new cybersecurity solution, Adlumin Managed Detection and Response, to help dental organizations better protect their businesses and sensitive healthcare data against growing cyber threats. It also introduced two powerful tools, Eligibility Essentials and Eligibility Pro, to simplify the insurance eligibility process for dental practices.

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 pursue targets that provide access to additional product lines. During the first quarter, the company completed the acquisition of Acentus, a national medical supplier specializing in the delivery of Continuous Glucose Monitors. The acquisition expands Henry Schein’s homecare medical products platform. Additionally, it acquired R. Weinstein, Inc. to expand in the Hawaiian Islands.

Headwinds for HSIC Stock

Macroeconomic Challenges: The current macroeconomic environment across the globe is affecting Henry Schein’s financial operations. Particularly, exchange rate fluctuations, inflation and recession are adversely impacting the company’s operational results. With the sustained macroeconomic pressures, HSIC may struggle to keep its cost of revenues and operating expenses in check. During the first quarter, the company’s cost of sales increased 0.4%, which dented the gross profit by 1.2%. Further, it faced a contraction of 34 bps in gross margin.

Tough Competition: The U.S. healthcare products and service distribution industry is highly competitive and consists principally of national, regional and local distributors. The competition in the fast-growing animal health market is also fierce. The competitive landscape in the overseas market is also tough. The tussle for market share might be a drag on results.

HSIC Stock Estimate Trend

The Zacks Consensus Estimate for HSIC’s 2025 earnings per share has remained unchanged at $4.87 in the past 30 days.

The Zacks Consensus Estimate for 2025 revenues is pegged at $12.96 billion, indicating a 2.3% rise from the year-ago reported number.

Key Picks

Some better-ranked stocks in the broader medical space are Align Technology ALGN, Abbott Laboratories ABT and Cencora COR.

Align Technology has an estimated long-term earnings growth rate of 11.2% compared with the industry’s 9.9% rise. Its earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 3.4%. Its shares have lost 27.7% compared with the industry’s 3.3% decline in the past year.

ALGN carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Abbott, currently carrying a Zacks Rank #2, has an earnings yield of 3.8% compared with the industry’s 0.6%. Shares of the company have surged 129.7% compared with the industry’s 35.9% gain. ABT’s earnings surpassed estimates in all of the trailing four quarters, the average surprise being 1.6%.

Cencora, carrying a Zacks Rank #2 at present, has an earnings yield of 5.4% compared with the industry’s 3.8%. Shares of the company have rallied 25.9% against the industry’s 14.4% decline. COR’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6%.

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This article originally published on Zacks Investment Research (zacks.com).

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