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It's not often that things go exactly as planned, but in the case of XRAY... so far, so good. XRAY announced earnings consistent with my original thesis for owning the stock posted back on May 28th, 2007.

Second quarter '07 earnings beat estimates by a penny due to strong top line organic earnings growth (organic earnings growth is the good kind of earnings growth). Further, XRAY raised 2007 earnings guidance from $1.56 - $1.61 per share to $1.60 - $1.64 per share.

Given this new information, XRAY should perform well over the next several trading days (and beyond) relative to the rest of the market (ceteris paribas). Further, I still like that over 60% of XRAY revenue comes from outside the US, it is still fairly cheap on a P/E and P/B basis, and until there are fundamental changes, I will continue to hold it as my primary healthcare stock.

Disclosure: author is long XRAY.

XRAY 1-yr chart:

XRAY 1-yr chart

Source: DENTSPLY International's Earnings Show It's Fundamentally Sound