The shares of these two companies have languished in the past few years. Even so, these firms are resisting demands from activist investors for big changes, which will likely continue to hold back their stocks.
HENRY SCHEIN INC. $77 is a hold.The company (Nasdaq symbol HSIC; Manufacturing & Industry sector; Shares outstanding: 124.7 million; Market cap: $9.6 billion; No dividend paid; Takeover Target Rating: Medium; www.henryschein.com) distributes dental and medical consumable products. It also provides software, technology and other value-added services to health-care practitioners. The company has more than one million customers worldwide and operations in 33 countries, including the U.S., Canada, and the U.K.
The company spun off its animal health business in February 2019. The spinoff then merged with the privately held Vets First Choice to form Covetrus Inc. (Nasdaq symbol CVET on Nasdaq).
Schein shareholders received 0.4 shares of Covetrus for every Schein share they held. In October 2022, Covetrus was taken private by investment companies Clayton, Dubilier & Rice, and TPG Capital.
Schein spent more than $4 billion on acquisitions in the last five years. Even so, the stock is roughly flat over that time compared to the S&P 500’s over 90% gain.
Activist investor Ananym Capital Management, which holds an undisclosed stake, wants Schein to sell its medical distribution business and use the cash to buy back its shares.
The company has not yet responded to these demands. However, the activist pressure helps draw attention to its quality assets.
Henry Schein is a hold.
SLEEP NUMBER CORP. $20 is a hold.The company (Nasdaq symbol SNBR; Manufacturing & Industry sector; Shares outstanding: 22.4 million; Market cap: $448.0 million; No dividend paid; Takeover Target Rating: Medium; www.sleepnumber.com) makes adjustable beds and mattresses. Its SleepIQ technology lets users control their bed position and track their sleep habits. The company sells its products online and through its 672 stores across the U.S.
On December 4, 1998, Sleep Number completed an initial public offering of 4.0 million shares at $17.00 each.
The stock got as high at $141 in 2021 during the COVID-19 pandemic, but is now just 18% above its IPO price. That drop is mainly due to increasing competition. Higher home prices and interest rates have also left consumers with less to spend on premium-priced beds.
Activist investment firm Stadium Capital Management, which owns 11.7% of Sleep Number, wants to replace most of its directors, particularly as the company is now looking for a new CEO.
The stock moved up on the news. However, it will likely stay in a narrow range until the next annual meeting in 2025 and the appointment of a new CEO.
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