Patterson’s Q4 Earnings Disappoint; Shares Plunge 12%


Patterson Companies, Inc. (PDCO), a provider of dental and animal health supplies, reported disappointing earnings for the fourth quarter. Reasons included COVID-19 related closures of dental practices and a slowdown in demand for non-essential pet-related services. Shares plunged 11.8% to close at $30.97 on June 23. (See Patterson stock chart on TipRanks)

The company reported Q4 adjusted earnings of $0.38 per share, down 11.6% year-over-year and missing the analysts’ estimate of $0.51 per share. Net sales for the quarter climbed 21.4% to $1.56 billion, beating the Street’s estimate of $1.52 billion.

On an annual basis, adjusted earnings were up 23.2% at $1.91 per share and net sales grew 7.7% to $5.91 billion. Compared to the year-ago period, Dental sales grew 50.4% to $616 million and Animal Health sales grew 10.1% to 939.3 million.

Patterson’s President and CEO Mark Walchirk said, “Looking ahead, we expect business conditions in our end markets to continue improving, and we remain focused on delivering top-line growth and margin improvement. Additionally, our strengthened balance sheet provides us with the flexibility to consider strategic investments that will help accelerate growth and value creation for our shareholders.”

For fiscal year 2022, the company projects adjusted earnings to be in the range of $1.90 to $2.05 per share, while the consensus estimate is pegged at $2.10 per share.

Following the results, Piper Sandler analyst Jason Bednar maintained a Buy rating on the stock but lowered the price target to $41 from $44, which is a 32.4% upside potential from current levels. Bednar believes the earnings pullback is a good buying opportunity for the stock.

While analyst Jeff Johnson of Robert W. Baird reiterated a Hold rating on the stock with a price target of $37, implying 19.5% upside potential to current levels.

Based on the 1 Buy and 1 Hold rating, the stock has a Moderate Buy consensus rating. The average analyst Patterson price target of $40.50 implies 30.8% upside potential to current levels. Shares have gained 54.6% over the past year.

Also, 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.

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