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Evercore ISI Downgrades Henry Schein (HSIC) to Hold

July 30, 2015 6:50 AM EDT
Get Alerts HSIC Hot Sheet
Price: $75.76 +0.81%

Rating Summary:
    14 Buy, 10 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 11 | New: 11
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Evercore ISI downgraded Henry Schein (NASDAQ: HSIC) from Buy to Hold with a price target of $157.00 (from $159.00).

Analyst Michael Cherny commented, "Henry Schein is one of the most predictable businesses within our coverage universe, with the ability to maintain a healthy level of organic growth (multi-year average despite a variety of market headwinds) as well as a consistent focus on supplementing core growth through bolt-on M&A. Shareholders have aptly rewarded HSIC for this performance, as over the last 9 months (starting just prior to 3Q'14, a major inflection point for growth), HSIC shares have risen ~30%, outperforming the S&P 500 by >2,000 bps and its closest peer, PDCO, by >1,000 bps. During this time, earnings have been generally solid, although our estimates have not meaningfully increased in the out years. The beauty of HSIC, as well, is that the strong portfolio of market exposure limits downside but also limits meaningful catalysts to drive outsized growth performance in any given quarter. Combining these factors with a tougher overall organic growth comp (3Q'14 was the recent high watermark for organic growth) and we feel now is a prudent time to step to the sidelines. Plain and simple, we do not see enough upside based on our current view of growth to justify maintaining a Buy rating, particularly with shares trading above any historical valuation range (currently >13x FY16 EV/EBITDA), and therefore we are Downgrading to Hold despite retaining a generally positive LT view on the overall business."

For an analyst ratings summary and ratings history on Henry Schein click here. For more ratings news on Henry Schein click here.

Shares of Henry Schein closed at $146.54 yesterday.



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