Dental and veterinary supplier Patterson Cos. (PDCO) jumped to a six-month high after its fiscal Q4 earnings and guidance late Thursday beat low expectations, further fueling one of the stronger groups of medical stocks.
Dental suppliers were among the few medical groups that held up well during the recent downturn, thanks to a business model that depends more on consumer spending than on government reimbursement. Patterson, however, was a relative laggard compared to such high-rated stocks as Align Technology (ALGN) (now No. 11 on the IBD 50), Henry Schein (HSIC) (Patterson’s most direct competitor), and Dentsply Sirona (XRAY).
“Given investors’ relatively low expectations for the stock and the relatively weaker year-to-date and quarter-to-date performance vs. Henry Schein, the stock should react somewhat positively today,” wrote Evercore ISI analyst Ross Muken in a note before the market opened.
Patterson stock was up 5.9% at the close on the stock market today, at 48.19. It was up more than 7% earlier, even though the news was mixed. Adjusted earnings rose 35% over the year-earlier quarter to 77 cents a share, beating analysts’ consensus by 2 cents, according to Thomson Reuters. But revenue for the period ended April 30 was slightly below estimates at $1.45 billion, up 40%.
Patterson guided its fiscal 2017 at $2.60 to $2.70 a share, up 7.3% at the midpoint from $2.47 the previous year and in line with consensus.
Q4 marks the fourth quarter in a row of double-digit profit and revenue growth for Patterson, after a stretch of decline. Its IBD EPS Rank is a strong 88 though its Relative Strength Rating was a weak 33 before Thursday’s move.
Henry Schein stock was up 0.7% to 172.72 at the close Thursday.