The Zacks Analyst Blog Highlights: Scripps Networks Interactive, Comcast, Henry Schein, McKesson and Patterson

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Jul 19, 2012, 09:30 ET

CHICAGO, July 19, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Scripps Networks Interactive (NYSE:SNI), Comcast Corporation (Nasdaq:CMCSA), Henry Schein, Inc. (Nasdaq:HSIC), McKesson Corporation (NYSE:MCK) and Patterson Companies Inc. (Nasdaq:PDCO).

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Here are highlights from Wednesday's Analyst Blog:

Scripps Strikes Deal with Comcast

U.S. media company Scripps Networks Interactive (NYSE:SNI) has struck a long-term deal with Comcast Corporation (Nasdaq:CMCSA) – the largest cable MSO in the U.S.

The multi-year contract with Comcast will enable Scripps Networks to offer their popular lifestyle media and interactive channels to Comcast's Xfinity TV customers on multiple platforms (TV, online, smartphones and tablets) as well as to Video on Demand (VOD) customers.

Higher proliferation of mobile devices has induced Scripps Networks to offer its content to Comcast customers on multiple devices whether at home or away, thereby expanding their reach to the customers. Moreover, application of Comcast's Dynamic ad insertion technology will further benefit Scripps Networks to keep track of the number of viewers watching their show, hence helping them to improve their TV ratings and simultaneously drive their advertisement revenue.

Successful integration of the U.S. and the U.K. based Travel Channels, re-branding of the FLN channel as Cooking Channel, and the divestment of the struggling Shopzilla networks will help Scripps Networks to maintain future growth by means of generating robust advertising and affiliate-fee revenues.

However, sluggish U.S. economic growth, recent drop in TV ratings coupled with higher programming cost and stiff competition from other Lifestyle Media channels will act as headwinds for the company going forward. Thus, we are maintaining our long-term Neutral recommendation on Scripps Networks.

Currently, Scripps Networks has a Zacks #3 Rank, implying a short-term Hold rating on the stock.

Henry Schein in Acquisition Spree

Acquisition spree continues for healthcare products and services distributor Henry Schein, Inc. (Nasdaq:HSIC) as it completed the acquisitions of Ortho Technology, Modern Laboratory Services and Accord, earlier this week. All the three acquisitions, representing annual sales of $61 million, are consistent with the company's advanced strategic plan to expand in the domestic and international market.

Henry Schein believes that these acquisitions will have no impact on the company's EPS in fiscal 2012. Financial terms of the deals were not revealed.

Florida-based Ortho Technology is expected to strengthen Henry Schein's position in the growing orthodontic market. Serving over 10,000 customers, Ortho Technology registered $24 million in sales with its orthodontic products in the dental specialty market. With the acquisition, Henry Schein also plans to expand further in the relatively untapped $1.25 billion global orthodontics market.

Further, in order to expand its geographic footprint in Asia, Henry Schein acquired Thailand based full-service dental distributor Accord that recorded sales of $15 million in 2011. With this acquisition, Thailand will be the 26th country where Henry Schein will operate, the fifth largest dental market in Asia with current market size of over $100 million.

The association with Accord, where Henry Schein currently holds a 75% stake, will also help it to expand in the Southeast Asia that represents an incremental $150 million market opportunity.

California-based Modern Laboratory Services, on the other hand, is one of the major distributors of products and services for physician office laboratories. In fiscal 2011, the company posted $22 million in sales serving for 700 customers in the Western U.S.

The dental and office-based physician markets are currently being driven by a number of positive demographic factors, including an increasing worldwide population and a growing number of adults aged 65 years and above. The present demographic trends indicate growth in the dental and medical markets as an aging US population is increasingly using healthcare services.

Between 2011 and 2021, this section of the population, comprising 45 year olds and above, is expected to grow by approximately 14%. Between 2011 and 2031, this age group is expected to grow by approximately 27%. This compares well with expected total U.S. population growth rates of approximately 9% between 2011 and 2021 and approximately 18% between 2011 and 2031.

As a result, Henry Schein is currently focusing on global expansion through strategic partnerships and acquisitions. Last week, the company entered into a global distribution agreement with Israel-based dental technology company ReDent Nova. The latest addition of these three companies is in pursuance of this strategy.

Henry Schein's portfolio consists of consumable products, small equipment, laboratory products, large dental and medical equipment, equipment repair services, branded and generic pharmaceuticals, vaccines, surgical products, diagnostic tests, infection-control products and vitamins.

The company continues to experience strong top-line growth and has established a strong foothold in both domestic and international markets in dental, veterinary and medical supply distribution. We are also encouraged by the company's focus on improving its cost structure to drive profitability.

Henry Schein's performance should improve further with the gradual recovery in the economic outlook. However, the company faces stiff competition from the likes of McKesson Corporation (NYSE: MCK) and Patterson Companies Inc. (Nasdaq: PDCO). The stock retains a short-term Zacks #3 Rank (Hold).

Currently, TiVo has a Zacks #3 Rank, which implies a Hold rating for the short term (1-3 months).

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