An Aging Population And Emerging Markets Will Fuel Digital Dentistry

Key Takeaways

• Acceleration in AI-driven platform adoption and operational streamlining can transform profitability and establish a dominant position in global digital dentistry.
  
• International growth opportunities and a focus on innovation position the company to outpace peers, capture new markets, and drive more consistent revenue expansion.
  
• Competitive pressures, integration challenges, slow digital innovation, and rising costs are constraining growth, compressing margins, and increasing uncertainty for future profitability.

Catalysts

Develops, manufactures, and markets dental equipment supported by cloud-enabled solutions, dental products, and healthcare consumable products in urology and enterology worldwide.

• Analysts broadly agree that DS Core platform adoption can drive recurring revenues and margins; however, given the accelerating integration of AI-driven features, proceduralization, and connected device expansion, the platform could become the dominant ecosystem in digital dentistry globally, allowing for a far greater shift toward high-margin, subscription-based revenue and exponential long-term earnings upside.
  
• While the consensus expects operational efficiency initiatives to support margin improvement, the new CEO's direct, hands-on strategy-focused on deepening and speeding up execution, aggressively streamlining operations, and reprioritizing spend-could lead to a much steeper and sustained expansion in EBITDA and free cash flow, with the potential to transform the profit structure over the next several years.
  
• As the global population ages and the middle class rapidly expands across emerging markets, DENTSPLY SIRONA's established Rest of World footprint and broad product range position it to capture huge, still largely untapped patient pools; this could fuel a robust acceleration in international revenues ahead of broader industry growth rates.
  
• By leveraging its leadership in technological innovation and integrating more AI and data-driven approaches into clinical workflows, DENTSPLY SIRONA is poised to unlock substantial procedure volume growth, outpacing peers and capturing greater market share, which can drive both top-line expansion and higher operating leverage.
  
• The company's commitment to maximizing internal innovation and methodical, cash-flow-driven M&A-rather than prioritizing short-term, cost-driven restructurings-could position it to achieve both stronger, more consistent revenue growth and lower earnings volatility as dental markets worldwide shift decisively toward preventive and aesthetic care.

DENTSPLY SIRONA Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on DENTSPLY SIRONA compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming DENTSPLY SIRONA's revenue will grow by 3.1% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from -25.9% today to 8.7% in 3 years time.
• The bullish analysts expect earnings to reach $348.5 million (and earnings per share of $2.02) by about August 2028, up from $-949.0 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 16.7x on those 2028 earnings, up from -3.0x today. This future PE is lower than the current PE for the US Medical Equipment industry at 29.6x.
• Analysts expect the number of shares outstanding to grow by 0.35% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 9.41%, as per the Simply Wall St company report.

DENTSPLY SIRONA Future Earnings Per Share Growth

Risks

• Sustained global pressure to reduce healthcare costs and limited dental procedure reimbursement could continue to suppress demand for high-margin products, as evidenced by management's acknowledgement that elective and implant procedure volumes remain soft and patient volumes largely unchanged, creating headwinds for long-term revenue growth.
  
• Heightened competition, particularly from low-cost Asian manufacturers and generic dental products, combined with ongoing price erosion and practice consolidation into DSOs, may lead to reduced pricing power and margin compression, especially as U.S. sales fell 18 percent year-over-year and management cited persistent softness in key product categories.
  
• The company's ability to innovate and capitalize on digital dentistry, CAD/CAM systems, and cloud-based DS Core offerings is uncertain, with management admitting progress is slower and monetization challenging, posing risks to future top-line growth and competitive positioning.
  
• Ongoing integration and restructuring issues-including ERP transitions, product line rationalizations, and operational inefficiencies inherited from prior mergers-continue to absorb management attention and capital, as reflected by a significant $214 million impairment charge and inventory build-up, which may depress future net margins and earnings.
  
• Rising tariff-related costs, which have recently escalated to an $80 million annualized headwind, are already impacting EBITDA margins, and management's reliance on mitigation efforts and supply chain adjustments introduces further volatility and risk of lower profitability in the medium term.

Valuation

• The assumed bullish price target for DENTSPLY SIRONA is $22.13, which represents two standard deviations above the consensus price target of $16.86. This valuation is based on what can be assumed as the expectations of DENTSPLY SIRONA's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $24.0, and the most bearish reporting a price target of just $14.0.
  
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $4.0 billion, earnings will come to $348.5 million, and it would be trading on a PE ratio of 16.7x, assuming you use a discount rate of 9.4%.
  
• Given the current share price of $14.4, the bullish analyst price target of $22.13 is 34.9% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.