3 Dental Supplies Stocks Likely to Gain From US-China Trade Deal

Core Viewpoint - The Zacks Medical - Dental Supplies industry is experiencing strong demand driven by patient preferences for convenient care and policy initiatives to enhance access to dental health services, with a positive outlook bolstered by a recent U.S.-China trade deal [1][2]. Industry Overview - The global dental industry encompasses companies that design, develop, manufacture, and market dental products, including consumables and laboratory products, with a recovery in sales following pandemic disruptions [3]. - The dental care sector is guided by recommendations from the American Dental Association and the CDC, with patient volumes increasing steadily despite COVID-19 uncertainties [4]. Major Trends - The aging population in the U.S. is a significant driver for the dental equipment market, with 55.8 million people aged 65 and above in 2020, leading to increased dental issues [5]. - There is a growing demand for aesthetic and cosmetic dentistry, influenced by media and current trends, which is contributing to the growth of the dental equipment market [6]. - Technological advancements, including digital imaging and AI integration, are enhancing the accuracy and effectiveness of dental treatments [7][8]. - Emerging markets, particularly in Asia-Pacific and the GCC region, are driving growth due to rising disposable incomes and increased awareness of oral health [8]. U.S.-China Trade Deal - The recent trade deal includes a temporary 90-day reduction in tariffs, significantly easing trade tensions and lowering import costs for medical supplies, which is expected to benefit the U.S. medical supplies industry [9]. Industry Performance - The Zacks Medical Dental Supplies industry has outperformed its sector but underperformed the S&P 500 over the past year, with a collective decline of 4.1% compared to a 16.3% decline in the Zacks Medical sector [12]. Current Valuation - The industry is currently trading at a forward P/E of 16.2X, equal to the sector's valuation but lower than the S&P 500's 20.7X, with historical trading ranges between 15.7X and 21X over the past five years [15]. Company Highlights - Cardinal Health (CAH): The company is witnessing strong demand for its services and is expected to benefit from the trade deal, which reduces tariff-related costs. CAH anticipates adjusted EPS in the range of $8.05-$8.15 for fiscal 2025, with double-digit growth expected in fiscal 2026 [18][20][21]. - Labcorp (LH): The company is focused on becoming a preferred development lab, with expected revenue growth of 6.7-8% for 2025. The reduced tariffs will aid in operational efficiency and cost management [24][27][28]. - Align Technology (ALGN): The company is positioned to drive digital innovation in dentistry and expects revenue growth of 3.9% for 2025, benefiting from reduced tariffs on imported components [31][35][36].