Patterson’s 3Q Results Beat The Street Consensus; Shares Dip 7%

Patterson Cos., a dental and animal health products seller reported better-than-expected fiscal 3Q earnings, driven by higher net sales and improved margins. However, shares closed 6.7% lower on March 3, as the company did not provide 4Q guidance citing the continued uncertainty related to the COVID-19 pandemic.

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Patterson (PDCO) reported 3Q adjusted earnings of $0.58 per share that surpassed analysts’ expectations of $0.51 and jumped 23.4% year-over-year. Adjusted net sales of $1.55 billion beat the Street’s estimates of $1.5 billion and increased 6.9% from the year-ago period.

The company’s dental segment reported a 3.6% year-over-year rise in internal sales in the quarter, driven by growth in consumables. Internal sales growth in the animal health segment was 10%. The adjusted operating margin was 4.6%, up 30 basis points.

Patterson CEO Mark Walchirk commented, “Looking ahead, we remain confident about our strengthened position in each of our end markets and in Patterson’s long-term value creation potential.” (See Patterson stock analysis on TipRanks)

Following the fiscal 3Q results, Piper Sandler analyst Jason Bednar increased the stock’s price target to $34 (13% upside potential) from $33 citing “another quarter of solid execution,” which he “identifies as a sixth consecutive quarter of upside compared to consensus revenue and EPS estimates.”

However, Bednar reiterated a Hold rating amid “lingering uncertainty.”

The rest of the Street is sidelined on the stock with a Hold consensus rating based on 1 Buy, 3 Holds, and 1 Sell. The average analyst price target of $33.80 implies about 12% upside potential to current levels. Shares have jumped about 26% over the past year.

According to TipRanks’ Smart Score system, Patterson gets a 5 out of 10, which indicates that the stock is likely to perform in line with market averages.