Henry Schein, the Healthcare sector company, was revisited by a Wall Street analyst yesterday. Analyst Jeff Johnson from Robert W. Baird downgraded the rating on the stock to a Hold and gave it a $72.00 price target.
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Jeff Johnson has given his Hold rating due to a combination of factors impacting Henry Schein’s outlook. A significant concern is the potential shift of Heartland Dental, HSIC’s largest global customer, away from HSIC. Heartland Dental is considering direct agreements with manufacturers or partnerships with other distributors, which could set a precedent affecting HSIC’s near-term returns.
While the direct financial impact of losing Heartland’s contract is expected to be manageable, the broader implications could pressure HSIC’s stock. The potential for other large customers to follow Heartland’s lead adds to the uncertainty. However, if Heartland remains with HSIC or partners with another dental dealer without pursuing direct manufacturer agreements, there may be room to revisit a more positive outlook for HSIC, especially considering potential cost efficiencies driven by KKR.