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Mentor, Ohio-based STERIS plc (STE) provides infection prevention products and services worldwide. With a market cap of $23.4 billion, STERIS operates through Healthcare, Applied Sterilization Technologies (AST), and Life Sciences segments.
The medical equipment provider has substantially underperformed the broader market over the past year. Over the past 52 weeks, STE gained 2.7%, lagging behind the S&P 500 Index’s ($SPX) 24.3 returns. In 2024, STE is up 8.1% compared to SPX’s 17.2% gains on a YTD basis.
Zooming in further, STERIS has underperformed the US Medical Devices Ishares ETF’s (IHI) 11% returns over the past 52 weeks and 8.5% gains on a YTD basis.
Despite reporting better-than-expected earnings, shares of STERIS dipped 2.4% after the release of its Q1 earnings on Aug. 6. The company’s revenue rose 8.1% annually to $1.3 billion, exceeding Wall Street’s expectations. Moreover, its net income attributable to shareholders grew by 17.7% to $145.4 million.
Additionally, the company repurchased shares worth $64.2 million in the previous year, demonstrating its confidence in the company’s valuation. Subsequently, the stock rebounded by 2.6% in the subsequent trading session.
For the current fiscal year, ending in March 2025, analysts expect STERIS to report an EPS growth of 11.6% annually to $9.15. The company’s earnings surprise history is mixed. It surpassed or matched the consensus estimates in three of the past four quarters while missing on another occasion. Its EPS for the last reported quarter surpassed the consensus estimates by 1% to $2.03.
Among the seven analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on four “Strong Buy” ratings and three “Holds.”
This configuration has been consistent over the past months.
On Aug. 8, Needham analyst Mike Matson maintained a “Hold” rating.
STE’s mean price target of $248.33 represents a premium of 4.5% from current price levels. The Street-high target of $265 indicates a potential upside of 11.5%.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
