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Reasons to Retain STERIS Stock in Your Portfolio for Now
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STERIS plc (STE - Free Report) rides on the robust performance of its Healthcare business.The company also benefits from the strong rebound prospects for its Applied Sterilization Technologies (“AST”) segment.
Meanwhile, headwinds such as foreign currency risks and macroeconomic challenges are concerning.
Year to date, shares of this Zacks Rank #3 (Hold) company have risen 10.6% compared with the industry’s 10% growth and the S&P 500’s 18.4% increase.
The renowned provider of infection prevention and other procedural products and services has a market capitalization of $23.98 billion. STE delivered a trailing four-quarter average earnings surprise of 0.58%.
STERIS: Key Upsides
Promising Healthcare Business: The Healthcare segment is gaining from the successful market adoption of its comprehensive offerings, including infection prevention consumables and capital equipment. For the fiscal first quarter, Healthcare reported revenue growth of 10% year over year. This outperformance reflected a 23% improvement in consumable revenues and 14% growth in service revenues, with both segments posting strong organic top-line growth.
Healthcare achieved 5% constant currency organic revenue growth for the fiscal first quarter. Also, the segment’s operating income was positively impacted by the increase in volume, along with favorable pricing and the addition of the surgical instrumentation assets purchased from Becton, Dickinson and Company.
Strong Rebound Prospects for the AST Segment: This technology-neutral contract sterilization service successfully offers a wide range of sterilization modalities through a worldwide network of more than 50 contract sterilization and laboratory facilities.
In the fiscal first quarter, the AST division experienced 7% reported growth year over year. This performance was driven by a 7% increase in service revenues and a 24% improvement in capital equipment revenues. Constant currency organic revenues were in the high single digits. STERIS enjoyed growth within MedTech in Europe.
STERIS: Key Downsides
Macroeconomic Problems: The current macroeconomic environment worldwide poses challenges for the company. In addition, economic and market volatility has been affecting the investment portfolio of STERIS’ legacy defined benefit pension plan.
Image Source: Zacks Investment Research
These macroeconomic factors are also resulting in a significant escalation in the company’s operating expenses. STERIS witnessed a 9.5% year-over-year rise in selling, general and administrative expenses in the fiscal first quarter. Research and development expenses rose 3.6%.
Foreign Currency Risks: STERIS’ business is exposed to the adverse impacts of foreign currency exchange fluctuations. With nearly 30% of the company’s revenues and 30% of the cost of revenues being generated outside the United States, foreign currency exchange rate fluctuations may significantly affect its financial position and results of operation.
Geopolitical instability is driving volatility in capital markets and foreign exchange rates. In the first quarter of fiscal 2025, the company’s revenues were negatively impacted by currency fluctuations of nearly $2.9 million.
Estimate Trends
In the past 30 days, the Zacks Consensus Estimate for STERIS’ fiscal 2026 earnings increased 0.5% to $10.04 per share.
The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $5.49 billion, which suggests 0.8% growth from the fiscal 2024 reported number.
Key Picks
Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , Intuitive Surgical (ISRG - Free Report) and Boston Scientific (BSX - Free Report) .
TransMedix Group’s earnings are expected to surge 255.8% in 2024. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Shares of the company have risen 148.6% in the past year compared with the industry’s 13.2% growth.
Intuitive Surgical, sporting a Zacks Rank of 1 at present, has an estimated long-term earnings growth rate of 17.4% compared with the industry’s 13.7%. Shares of the company have risen 57.1% compared with the industry’s 13.2% growth over the past year.
ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated earnings growth rate of 17.1% for 2024 compared with the industry’s 15.7%. Year to date, shares of BSX have risen 40.4% compared with the industry’s 12.4% growth.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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Reasons to Retain STERIS Stock in Your Portfolio for Now
STERIS plc (STE - Free Report) rides on the robust performance of its Healthcare business.The company also benefits from the strong rebound prospects for its Applied Sterilization Technologies (“AST”) segment.
Meanwhile, headwinds such as foreign currency risks and macroeconomic challenges are concerning.
Year to date, shares of this Zacks Rank #3 (Hold) company have risen 10.6% compared with the industry’s 10% growth and the S&P 500’s 18.4% increase.
The renowned provider of infection prevention and other procedural products and services has a market capitalization of $23.98 billion. STE delivered a trailing four-quarter average earnings surprise of 0.58%.
STERIS: Key Upsides
Promising Healthcare Business: The Healthcare segment is gaining from the successful market adoption of its comprehensive offerings, including infection prevention consumables and capital equipment. For the fiscal first quarter, Healthcare reported revenue growth of 10% year over year. This outperformance reflected a 23% improvement in consumable revenues and 14% growth in service revenues, with both segments posting strong organic top-line growth.
Healthcare achieved 5% constant currency organic revenue growth for the fiscal first quarter. Also, the segment’s operating income was positively impacted by the increase in volume, along with favorable pricing and the addition of the surgical instrumentation assets purchased from Becton, Dickinson and Company.
Strong Rebound Prospects for the AST Segment: This technology-neutral contract sterilization service successfully offers a wide range of sterilization modalities through a worldwide network of more than 50 contract sterilization and laboratory facilities.
In the fiscal first quarter, the AST division experienced 7% reported growth year over year. This performance was driven by a 7% increase in service revenues and a 24% improvement in capital equipment revenues. Constant currency organic revenues were in the high single digits. STERIS enjoyed growth within MedTech in Europe.
STERIS: Key Downsides
Macroeconomic Problems: The current macroeconomic environment worldwide poses challenges for the company. In addition, economic and market volatility has been affecting the investment portfolio of STERIS’ legacy defined benefit pension plan.
Image Source: Zacks Investment Research
These macroeconomic factors are also resulting in a significant escalation in the company’s operating expenses. STERIS witnessed a 9.5% year-over-year rise in selling, general and administrative expenses in the fiscal first quarter. Research and development expenses rose 3.6%.
Foreign Currency Risks: STERIS’ business is exposed to the adverse impacts of foreign currency exchange fluctuations. With nearly 30% of the company’s revenues and 30% of the cost of revenues being generated outside the United States, foreign currency exchange rate fluctuations may significantly affect its financial position and results of operation.
Geopolitical instability is driving volatility in capital markets and foreign exchange rates. In the first quarter of fiscal 2025, the company’s revenues were negatively impacted by currency fluctuations of nearly $2.9 million.
Estimate Trends
In the past 30 days, the Zacks Consensus Estimate for STERIS’ fiscal 2026 earnings increased 0.5% to $10.04 per share.
The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $5.49 billion, which suggests 0.8% growth from the fiscal 2024 reported number.
Key Picks
Some better-ranked stocks in the broader medical space are TransMedix Group (TMDX - Free Report) , Intuitive Surgical (ISRG - Free Report) and Boston Scientific (BSX - Free Report) .
TransMedix Group’s earnings are expected to surge 255.8% in 2024. The company’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%. Shares of the company have risen 148.6% in the past year compared with the industry’s 13.2% growth.
TMDX sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical, sporting a Zacks Rank of 1 at present, has an estimated long-term earnings growth rate of 17.4% compared with the industry’s 13.7%. Shares of the company have risen 57.1% compared with the industry’s 13.2% growth over the past year.
ISRG’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.97%.
Boston Scientific, carrying a Zacks Rank #2 (Buy) at present, has an estimated earnings growth rate of 17.1% for 2024 compared with the industry’s 15.7%. Year to date, shares of BSX have risen 40.4% compared with the industry’s 12.4% growth.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.