November 19, 2013
November domestic dental survey raises incremental concerns as patient volumes continue to bounce along multi-month lows and equipment purchasing remains tepid. While our recent channel checks (including at ADA two weeks ago) have been better, we find it increasingly difficult to look past recently disappointing survey data and believe upcoming checks at GNYDM now take on added importance. Retaining Outperform ratings on XRAY and HSCI, but not putting new money to work in either until we have greater 4Q confidence/clarity.
November dental survey fielded November 1-12 (n=194 dentists/dental practitioners) suggests domestic dental end markets remain soft and are trending below late-2Q/early-3Q results. Key takeaways from our survey include:
- Patient volumes on a trailing 3-6 month basis contracted 3.0%, 70bp worse than our October survey and 210bp worse than our average findings throughout all of our 3Q surveys.
- While seasonality may be playing some role in recent softening (as office traffic slows at end of summer), our surveys over the past four years suggest seasonality should have begun to abate already, leading us to worry other macro factors (recent fall-off in consumer confidence, etc.) may truly be impacting patient volumes at this point.
- As for dental equipment, dentists’ near-term spending outlook remains cautious, although slightly improved vs. our past couple surveys.
