Thursday, Credit Suisse initiated coverage of Sirona Dental Systems Inc. (SIRO) stock with a Neutral rating and a price target of $23. The brokerage established its 2009 EPS estimate of $1.65, and its 2010 estimate of $1.88.
Analyst Santangelo believes that Sirona is well positioned to benefit from the positive longer-term secular trends in the dental industry. However, the analyst initiated the stock at Neutral owing to: concerns around large equipment purchases by dentists in the current environment; increased competition within their product categories; and raised expectations after the 96% year-to-date increase in the stock price. Given the run in shares, and aforementioned concerns, the analyst believes a Neutral rating is appropriate.
The analyst highlights the investment positives for Sirona: launch of CEREC AC with Bluecam technology, puts it a step ahead of its peers in the CAD/CAM market; launch of CEREC Connect opens Sirona to the digital impression market, a whole new market for Sirona, with a low price point-a positive in this economic environment; EagleSoft promotion had positive impact on Schick digital radiography sales and; near-term company should benefit from CEREC trade-in program and positive sales momentum from IDS show in Germany.
The analyst highlights the risk factors for the company: concerns over equipment sales in current environment; increased competition in key product categories; slower-than-expected industry adoption rates for key products, and expectations are climbing.
Currently, SIRO is up $0.03 or 0.15% and trading at $20.65.
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