Patterson Shares Jump 6.6% on Solid Q1 Beat

Patterson Companies, Inc. (PDCO), a provider of dental and animal health supplies, delivered strong first-quarter results boosted by solid growth in both the Dental and Animal Health segments, as well as an extra week of sales compared to the prior-year period. Shares jumped 6.6% on the news, closing at $32.10 on September 2.

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The company posted adjusted earnings of $0.43 per share, up 30% year-over-year and much better than analysts’ estimates of $0.37 per share. (See Patterson Companies stock charts on TipRanks)

To add to that, net sales climbed 29.6% compared to the year-ago period to $1.61 billion and outpaced the Street’s estimate of $1.44 billion.

The Dental segment’s sales were boosted by strong performances across consumables, equipment, and value-added services. The Animal Health segment’s sales increase was backed by continued strong performance in companion animal and faster than expected recovery in production animal.

Commenting on the results, Mark Walchirk, President and CEO of Patterson, said, “Given our strong start to fiscal 2022, we are raising the lower end of our adjusted EPS guidance range to reflect our continued momentum and confidence for the remainder of the year. We remain focused on leveraging the combined strength of our team, our strategy, and the essential role we serve for our customers to continue driving long-term growth and shareholder value.”

For the full fiscal year 2022, Patterson raised its adjusted earnings guidance to fall in the range of $1.95 – $2.05 per share compared to the consensus estimate of $2.00 per share.

In response to the company’s strong performance, Stifel Nicolaus analyst Jonathan Block lifted the price target on the stock to $32 from $30 while maintaining a Hold rating. This implies that shares are fully valued at current levels.

The analyst notes that the company’s sales growth was well balanced between the Dental and Animal Health segments, as he believes a “solid Companion Animal market and U.K. supplier win” continue to boost Animal Health results.

Also, the analyst was more impressed by the company’s headline revenue/EPS beats than the normalized numbers as reported revenue included an extra week of sales, and $0.02 of the $0.05 beat came mainly from below the EBIT line.

Overall, the stock has a Moderate Buy consensus rating based on 2 Buys and 3 Holds. The average Patterson Companies price target of $35.80 implies 11.5% upside potential to current levels. Shares have gained 21.4% over the past year.