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Here's Why You Should Retain STERIS (STE) Stock for Now
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STERIS plc (STE - Free Report) is well poised for growth in the coming months, backed by strong segmental growth in the fiscal second quarter. The seamless integration process of Cantel Medical buoys optimism for the stock. Further, the bullish fiscal 2022 outlook is encouraging. However, stiff competition and macroeconomic problems are a concern.
In the past year, shares of this Zacks Rank #3 (Hold) company have gained 24.9% compared with the industry’s 6.2% rise. The S&P 500 rose 27.5% during the same period.
The renowned provider of infection prevention as well as other procedural products and services has a market capitalization of $23.09 billion. The company projects 12.1% growth for the next year. Further, it surpassed estimates in three of the trailing four quarters and missed in one, delivering a surprise of 6.88%, on average.
Riding on current business growth and bullish near-term prospects, the company is worth holding on to for now.
Factors at Play
Strong Segmental Business Amid Pandemic: In the second quarter of fiscal 2022, revenues improved 58.3% year over year while organic revenues at constant currency or CER rose 12% year over year. Meanwhile, revenues at Healthcare rose 58% year over year on a 120% increase in consumable revenues, a 25% rise in service revenues and a 54% improvement in capital equipment revenues. Revenues at AST improved 21% on a reported basis and 19% at CER organic basis. Revenues at the Life Sciences segment rose 14% year over year on 8% growth in capital equipment revenues and a 17% rise in service revenues. The Dental segment reported 10% growth for the quarter.
Progress in Healthcare and Pharmaceutical Industries: The bulk of STERIS’ revenues are obtained from the healthcare and pharmaceutical industries. In June, STERIS acquired Cantel Medical, a global provider of infection prevention products and services, primarily catering to endoscopy and dental customers. Earlier in November, STERIS acquired Key Surgical, which strengthens, complements and expands STERIS’ product offerings and global reach. According to STERIS, with the addition of Key Surgical and Cantel products and services, the company will be better positioned than ever to meet customers' needs.
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Bullish Guidance: STERIS expects constant currency organic revenue growth in the range of 10-11% for fiscal 2022. Adjusted earnings per diluted share are anticipated in the band of $7.60-$7.85.
Downsides
On the flip side, some factors have been deterring the stock’s rally of late.
Competitive Landscape: STERIS expects to face continued competition as new infection prevention, sterile processing, contamination control, gastrointestinal and surgical support products and services enter the market.
Macroeconomic Problems: The current macroeconomic environment across the globe has affected STERIS’ financial operations. Governments and insurance companies continue to look for ways to contain the rising cost of healthcare. This might put pressure on players in the healthcare industry, with STERIS being no exception.
Estimate Trends
STERIS is witnessing a positive estimate revision trend for the current year. In the past 90 days, the Zacks Consensus Estimate for earnings has moved 2.2% north to $7.87.
The Zacks Consensus Estimate for third-quarter fiscal 2022 revenues is pegged at $1.21 billion, suggesting 49.7% growth from the year-ago quarter’s reported number.
Thermo Fisher, currently carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted earnings per share (EPS) of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO surpassed estimates in the trailing four quarters, the average surprise being 9.02%.
LabCorp, carrying a Zacks Rank #1, reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%. It currently sports a Zacks Rank #2.
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Here's Why You Should Retain STERIS (STE) Stock for Now
STERIS plc (STE - Free Report) is well poised for growth in the coming months, backed by strong segmental growth in the fiscal second quarter. The seamless integration process of Cantel Medical buoys optimism for the stock. Further, the bullish fiscal 2022 outlook is encouraging. However, stiff competition and macroeconomic problems are a concern.
In the past year, shares of this Zacks Rank #3 (Hold) company have gained 24.9% compared with the industry’s 6.2% rise. The S&P 500 rose 27.5% during the same period.
The renowned provider of infection prevention as well as other procedural products and services has a market capitalization of $23.09 billion. The company projects 12.1% growth for the next year. Further, it surpassed estimates in three of the trailing four quarters and missed in one, delivering a surprise of 6.88%, on average.
Riding on current business growth and bullish near-term prospects, the company is worth holding on to for now.
Factors at Play
Strong Segmental Business Amid Pandemic: In the second quarter of fiscal 2022, revenues improved 58.3% year over year while organic revenues at constant currency or CER rose 12% year over year. Meanwhile, revenues at Healthcare rose 58% year over year on a 120% increase in consumable revenues, a 25% rise in service revenues and a 54% improvement in capital equipment revenues. Revenues at AST improved 21% on a reported basis and 19% at CER organic basis. Revenues at the Life Sciences segment rose 14% year over year on 8% growth in capital equipment revenues and a 17% rise in service revenues. The Dental segment reported 10% growth for the quarter.
Progress in Healthcare and Pharmaceutical Industries: The bulk of STERIS’ revenues are obtained from the healthcare and pharmaceutical industries. In June, STERIS acquired Cantel Medical, a global provider of infection prevention products and services, primarily catering to endoscopy and dental customers. Earlier in November, STERIS acquired Key Surgical, which strengthens, complements and expands STERIS’ product offerings and global reach. According to STERIS, with the addition of Key Surgical and Cantel products and services, the company will be better positioned than ever to meet customers' needs.
Bullish Guidance: STERIS expects constant currency organic revenue growth in the range of 10-11% for fiscal 2022. Adjusted earnings per diluted share are anticipated in the band of $7.60-$7.85.
Downsides
On the flip side, some factors have been deterring the stock’s rally of late.
Competitive Landscape: STERIS expects to face continued competition as new infection prevention, sterile processing, contamination control, gastrointestinal and surgical support products and services enter the market.
Macroeconomic Problems: The current macroeconomic environment across the globe has affected STERIS’ financial operations. Governments and insurance companies continue to look for ways to contain the rising cost of healthcare. This might put pressure on players in the healthcare industry, with STERIS being no exception.
Estimate Trends
STERIS is witnessing a positive estimate revision trend for the current year. In the past 90 days, the Zacks Consensus Estimate for earnings has moved 2.2% north to $7.87.
The Zacks Consensus Estimate for third-quarter fiscal 2022 revenues is pegged at $1.21 billion, suggesting 49.7% growth from the year-ago quarter’s reported number.
Key Picks
Few better-ranked stocks from the broader medical space are Thermo Fisher Scientific Inc. (TMO - Free Report) , Laboratory Corporation of America Holdings (LH - Free Report) , or LabCorp and Medpace Holdings, Inc. (MEDP - Free Report) . You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher, currently carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted earnings per share (EPS) of $5.76, which surpassed the Zacks Consensus Estimate by 23.3%. Revenues of $9.33 billion outpaced the Zacks Consensus Estimate by 12%.
Thermo Fisher has an estimated long-term growth rate of 14%. TMO surpassed estimates in the trailing four quarters, the average surprise being 9.02%.
LabCorp, carrying a Zacks Rank #1, reported third-quarter 2021 adjusted EPS of $6.82, which surpassed the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion outpaced the Zacks Consensus Estimate by 13.4%.
LabCorp has an estimated long-term growth rate of 10.6%. LH surpassed estimates in the trailing four quarters, the average surprise being 25.7%.
Medpace reported third-quarter 2021 adjusted EPS of $1.29, surpassing the Zacks Consensus Estimate by 20.6%. Revenues of $295.57 million beat the Zacks Consensus Estimate by 1.2%.
Medpace has an estimated long-term growth rate of 16.4%. MEDP surpassed estimates in the trailing four quarters, the average surprise being 11.9%. It currently sports a Zacks Rank #2.