Patterson Companies Slips 4.7% Despite Surpassing Q2 Expectations

Shares of Minnesota-based medical supplies conglomerate Patterson Companies, Inc. (PDCO) closed 4.7% down on Wednesday despite better-than-expected results for the fiscal second quarter ended October 30.

Patterson is primarily engaged in the supply of veterinary and dental products in North America and the U.K.

Q2 Results

Adjusted earnings per share (EPS) came in at $0.58, higher than the Street’s estimate of $0.50 per share but lower than the year-ago figure of $0.63 per share. The year-over-year decline is mainly due to lower expenses associated with COVID-19 in the prior-year period.

Net sales increased 6.2% year-over-year to $1.65 billion, surpassing analysts’ expectations of $1.58 billion. (See Insiders’ Hot Stocks on TipRanks)

The Dental segment’s net sales totaled $622.2 million and net sales for the Animal Health segment amounted to $1 billion during the quarter.

CEO Comments

The President and CEO of Patterson, Mark Walchirk, said, “Given our momentum and confidence in the business, we are increasing our adjusted EPS guidance range for the Fiscal Year 2022.”

Outlook

The company has raised its outlook for the Fiscal Year 2022 and expects adjusted EPS in the range of $2.00 to $2.10, compared to the earlier guidance range of $1.95 to $2.05.

Wall Street’s Take

Following the release of the second-quarter results, Piper Sandler (PIPR) analyst Jason Bednar maintained a Buy rating on the stock with a price target of $41 (36.7% upside potential).

The analyst views the company as his “top value idea,” and believes the stock is underperforming the dental group.

Overall, the stock has a Moderate Buy consensus rating based on 2 Buys and 2 Holds. The average Patterson Companies price target of $37.75 implies 25.8% upside potential. Shares have lost 10.5% over the past six months.

Smart Score

According to TipRanks’ Smart Score rating system, Patterson scores a 9 out of 10, suggesting that the stock is likely to outperform market averages.

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