/Steris%20Plc%20logo%20and%20chart-by%20Piotr%20Swat%20via%20Shutterstock.jpg)
Ohio-based STERIS plc (STE) develops, manufactures, and markets infection prevention, decontamination, microbial reduction, and surgical and gastrointestinal support products and services. Valued at a market cap of $21.3 billion, the company operates through three segments, which are Healthcare, Applied Sterilization Technologies (AST), and Life Sciences.
Shares of this healthcare company have underperformed the broader market over the past 52 weeks. STE has gained 8% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 31.8%. Moreover, on a YTD basis, the stock is down 1.2%, compared to SPX’s 25.8% gains.
Narrowing the focus, STE’s underperformance becomes more evident when compared to the Health Care Select Sector SPDR Fund’s (XLV) 12.8% gain over the past 52 weeks and nearly 7.8% return on a YTD basis.
Shares of STE fell 5.3% after its Q2 earnings release on Nov. 6. The company’s revenue increased 7.3% year-over-year to $1.3 billion and met Wall Street projections, while its adjusted earnings climbed 15% on an annual basis to $2.14 per share and narrowly edged past Street estimates.
For the current fiscal year, ending in March 2025, analysts expect STE’s EPS to increase 11.6% year over year to $9.15. The company’s earnings surprise history is promising. It surpassed or met the consensus estimates in each of the last four quarters.
Among the seven analysts covering the stock, the consensus rating is a “Strong Buy,” which is based on five “Strong Buy” and two “Hold” ratings.
The configuration is slightly more bullish than three months ago, with four analysts suggesting a “Strong Buy.”
On Oct. 24, Piper Sandler upgraded STE to an “Overweight” rating and raised its price target to $260, which indicates a 19.5% upside potential from the current levels.
The mean price target of $257.50 represents an 18.4% upside from STE’s current price levels, while the Street-high price target of $265 suggests a modest upside potential of 21.8%.
