Morningstar

Morningstar, Inc.

Equity Bottom-Up

Patterson reported mixed fiscal 2019 fourth-quarter results. We may slightly reduce our fair value estimate as we incorporate management's lower-than-expected 2020 guidance, and we are leaving our no-moat rating intact. Management issued fiscal 2020 adjusted EPS guidance of $1.33-$1.43 which is slightly below our prior estimate of $1.47. While we are encouraged by Patterson's continued efforts to manage costs, we remain concerned about long-term dental headwinds
Patterson's dental business…

From our perspective, Patterson's position as a major supplier to dental practices has diminished over the past few years, as competition in the dental consumable segment has increased significantly. What has ensued for Patterson has been retrenching revenue and compressing profits. From what we can gather, the increased competition has emanated from new online-based wholesale players that can source consumables from the cheapest suppliers nationwide. We believe this pressure will last a…

<p>From our perspective, Patterson's position as a major supplier to dental practices has diminished over the past few years, as competition in the dental consumable segment has increased significantly. What has ensued for Patterson has been retrenching revenue and compressing profits. From what we can gather, the increased competition has emanated from new online-based wholesale players that can source consumables from the cheapest suppliers nationwide. We believe this pressure will last a…</p>

United States

Patterson Companies Inc. distributes dental products, veterinary supplies for companion pets, and rehabilitation supplies. The Company sells and markets to dental clinics and laboratories, veterinarians, and to the physical and occupational therapy markets.

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