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Analyzing the Performance of Danaher’s Dental Business

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Aug. 18 2020, Updated 6:22 a.m. ET

Dental segment

Danaher’s (DHR) Dental segment’s products are used for diagnosing, treating, and preventing disease and ailments of teeth, gums, and supporting bones. The company is a leading global provider of dental consumables, equipment, and services.

During the second quarter, the Dental segment’s geographic revenues totaled $346.1 million in North America, $170.5 million in Western Europe, $47.1 million in other developed markets, and $169.7 million in high-growth markets.

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Danaher’s Dental segment’s recurring revenues reached $547.3 million, and its nonrecurring revenues totaled $186.1 million in the second quarter. This segment’s operating margin contracted from 15.6% in the second quarter of 2017 to 14.3% in the second quarter. The contraction in operating margins was attributable to higher sales and marketing costs as well as lower overall pricing.

Analysts’ recommendations

Eighteen analysts are covering Danaher Corp. (DHR) in September. Fifteen analysts gave Danaher stock a “buy” or higher rating, and three analysts gave Danaher a “hold” rating. The mean rating for Danaher stock is 1.83 with a target price of $114.07.

Among Danaher’s peers, analysts gave mean ratings of 1.95 and 2.06, respectively, to Illumina (ILMN) and Intuitive Surgical (ISRG). Illumina’s target price is $343.07, and Intuitive Surgical’s target price is $565.80.

Valuation metrics

Danaher Corp.’s (DHR) enterprise value is $85.21 billion, and its enterprise-value-to-revenue ratio is 4.42. The stock is trading at a forward price-to-earnings multiple of 22.36x. Its price-to-sales ratio is 3.93, and its price-to-book ratio is 2.79. Danaher stock has been in an uptrend, rising from $98.13 on July 2 to its present level of $108.00 in September.

We’ll take a look at Henry Schein’s animal unit spin-off in the next part.

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