SmileDirectClub Soars on Deal With Walmart, Analyst's Buy Rating

The oral care company will sell toothbrushes, toothpastes and other products at the giant retailer.
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Shares of oral care company SmileDirectClub (SDC) - Get Report jumped Monday on news that it entered an exclusive deal with Walmart (WMT) - Get Report to sell several of its products and after an analyst’s buy recommendation.

The products will be sold in the retailer’s stores and on Walmart.com. The offerings include an electric toothbrush, a teeth whitening system with an LED light, whitening and sensitivity toothpastes, a water flosser and an ultrasonic UV cleaner that washes toothbrush heads, aligners and other dental items.

“Today, we are proud to partner with Walmart, and look forward to disrupting the oral care aisle and category,” Amy Keith, vice president of retail for Nashville-based SmileDirectClub, said in a statement.

The move constitutes the company’s initial foray into broad-consumer products. Previously it sold tooth aligners and a whitener.

The deal doesn’t include the company’s controversial clear plastic teeth aligners. SmileDirectClub has five-year, non-exclusive agreements with CVS Health (CVS) - Get Report and Walgreens (WBA) - Get Report to open up to 1,500 shops in their stores to sell those items, Yahoo reported.

Meanwhile, Alexander Nowak, senior analyst at Craig-Hallum Capital Group, initiated coverage of SmileDirectClub Monday with a buy rating.

“SmileDirectClub is upsetting the existing mold of orthodontics by lowering physician involvement to provide increased access, better service and a reduced cost to the consumer,” he wrote in a report.

“This is driving SDC to take share and grow an already large $18 billion market. With a moat established, SDC is setting itself up for many years of share gains while insulating itself from potential copy-cats," he added.

Nowak has a price target of $20 for the stock. It stood at $9.88 on Monday, up 17.9%.

The author owns shares of Walmart and Walgreens.