Goldman Sachs On PDCO

Goldman Sachs has published a research report on Patterson Companies, Inc. PDCO after the company reported 2Q results that were in-line with Goldman and Consensus estimates. In the report, Goldman Sachs writes "While Patterson's 2QFY11 results were relatively in line with our and Street expectations, we view equipment performance in each segment as promising, particularly in Dental where we believe the business will likely perform better than consumables over the next several quarters as it is less hampered by stagnant patient visits. Specifically, overall equipment sales were up 14% in the quarter, helped by impressive sales of CEREC, up over 30% year-over-year. Also, despite still somewhat low visibility, management remains comfortable with its goal of growing CEREC sales by 10% this year. However, we saw consumable sales decelerate across all three segments which led to operating margins falling 52 bp short of our estimate. Furthermore, Patterson discussed seeing initial austerity-driven softness in the U.K. in its Rehab business which we believe could be a headwind in the back-half of FY11." Goldman Sachs maintains its Neutral rating and $30 price target. Patterson Companies closed yesterday at $29.04.