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In the last reported quarter, the company posted adjusted earnings per share (EPS) of $2.14, which beat the Zacks Consensus Estimate by 1.4%. STE beat on earnings in each of the trailing four quarters, delivering an average surprise of 1.18%.
STE’s Q3 Estimates
The Zacks Consensus Estimate for revenues is pegged at $1.38 billion, suggesting a decrease of 1.1% from the year-ago reported figure.
The Zacks Consensus Estimate for EPS is pegged at $2.32, indicating a year-over-year increase of 4.5%.
Estimate Revision Trend Ahead of STE’s Q3 Earnings
Estimates for earnings have remained constant at $2.32 per share in the past 30 days.
Let's take a look at how things might have shaped up for the MedTech major prior to the announcement.
Healthcare
In the fiscal second quarter, growth across consumables and services was robust, favored by procedure volumes in the United States as well as price and market share gains. We expect this trend to have sustained in the fiscal third quarter as well.
During the fiscal second quarter, orders grew over 30%, resulting in a $405 million healthcare backlog. However, we assume the Healthcare backlog to have finally normalized during the fiscal third quarter as the company might have been able to ship at a faster pace than the new orders. STERIS’ focus on getting back to normal lead times must have helped it meet customer demand.
Healthcare capital equipment revenues declined in the previous quarter against challenging macro scenarios. Also, on STE’s previous earnings call, it anticipated flat revenue growth to slight decline of capital equipment for the entire fiscal year. However, STE expects recurring revenues to continue to grow above procedure volumes and be relatively independent of capital equipment shipments. These factors are likely to have impacted the company’s top line in the to-be-reported quarter.
Our model projects the segment’s revenues to improve 6.2% from the year-ago reported figure.
Applied Sterilization Technologies (AST)
In the fiscal second quarter, Steris experienced organic revenue growth within this segment. Also, AST’s performance during the quarter was one of the best it has seen in over a year. In line with this, global MedTech customers were stable in the quarter and the company experienced the first signs of increased bioprocessing demand. We expect this trend to have continued in the to-be-reported quarter.
On STE’s fiscal second-quarter earnings call, it mentioned that its bioprocessing revenues are expected to grow in the second half of fiscal 2025. This should be reflected in the company’s fiscal third-quarter results.
Per our model, the AST segment’s revenues for the quarter are likely to increase 8.9% year over year.
Life Sciences
The segment's fiscal second-quarter reported revenues were affected by the divestiture of the Controlled Environmental Services business. This might have contributed to its revenues in the to-be-reported quarter. However, the segment experienced constant currency organic growth during the second quarter, driven by strong growth in consumables. We expect this trend to have continued in the fiscal third quarter.
Our model projects the segment’s revenues to increase 2.3% year over year.
What Our Model Suggests for STE
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating on earnings, which is not the case here.
Earnings ESP: STERIS has an Earnings ESP of -0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this reporting cycle.
The company is expected to release fourth-quarter 2024 results shortly. The Zacks Consensus Estimate for EPS implies a surge of 196.4% from the year-ago quarter’s reported figure.
Arcutis Biotherapeutics (ARQT - Free Report) has an Earnings ESP of +7.97% and a Zacks Rank #2 at present. The company is expected to release its fourth-quarter 2024 results shortly. ARQT’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 17.46%.
Axogen (AXGN - Free Report) has an Earnings ESP of +36.36% and a Zacks Rank #3 at present. The company is expected to release fourth-quarter 2024 results shortly. The Zacks Consensus Estimate for EPS implies a surge of 166.7% from the year-ago quarter’s reported figure.
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STE Gears Up for Q3 Earnings: Here's What You Need to Know
STERIS plc (STE - Free Report) is expected to release third-quarter fiscal 2025 results on Feb. 6, before market open.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
In the last reported quarter, the company posted adjusted earnings per share (EPS) of $2.14, which beat the Zacks Consensus Estimate by 1.4%. STE beat on earnings in each of the trailing four quarters, delivering an average surprise of 1.18%.
STE’s Q3 Estimates
The Zacks Consensus Estimate for revenues is pegged at $1.38 billion, suggesting a decrease of 1.1% from the year-ago reported figure.
The Zacks Consensus Estimate for EPS is pegged at $2.32, indicating a year-over-year increase of 4.5%.
Estimate Revision Trend Ahead of STE’s Q3 Earnings
Estimates for earnings have remained constant at $2.32 per share in the past 30 days.
Let's take a look at how things might have shaped up for the MedTech major prior to the announcement.
Healthcare
In the fiscal second quarter, growth across consumables and services was robust, favored by procedure volumes in the United States as well as price and market share gains. We expect this trend to have sustained in the fiscal third quarter as well.
During the fiscal second quarter, orders grew over 30%, resulting in a $405 million healthcare backlog. However, we assume the Healthcare backlog to have finally normalized during the fiscal third quarter as the company might have been able to ship at a faster pace than the new orders. STERIS’ focus on getting back to normal lead times must have helped it meet customer demand.
Healthcare capital equipment revenues declined in the previous quarter against challenging macro scenarios. Also, on STE’s previous earnings call, it anticipated flat revenue growth to slight decline of capital equipment for the entire fiscal year. However, STE expects recurring revenues to continue to grow above procedure volumes and be relatively independent of capital equipment shipments. These factors are likely to have impacted the company’s top line in the to-be-reported quarter.
Our model projects the segment’s revenues to improve 6.2% from the year-ago reported figure.
Applied Sterilization Technologies (AST)
In the fiscal second quarter, Steris experienced organic revenue growth within this segment. Also, AST’s performance during the quarter was one of the best it has seen in over a year. In line with this, global MedTech customers were stable in the quarter and the company experienced the first signs of increased bioprocessing demand. We expect this trend to have continued in the to-be-reported quarter.
STERIS plc Price and EPS Surprise
STERIS plc price-eps-surprise | STERIS plc Quote
On STE’s fiscal second-quarter earnings call, it mentioned that its bioprocessing revenues are expected to grow in the second half of fiscal 2025. This should be reflected in the company’s fiscal third-quarter results.
Per our model, the AST segment’s revenues for the quarter are likely to increase 8.9% year over year.
Life Sciences
The segment's fiscal second-quarter reported revenues were affected by the divestiture of the Controlled Environmental Services business. This might have contributed to its revenues in the to-be-reported quarter. However, the segment experienced constant currency organic growth during the second quarter, driven by strong growth in consumables. We expect this trend to have continued in the fiscal third quarter.
Our model projects the segment’s revenues to increase 2.3% year over year.
What Our Model Suggests for STE
Per our proven model, a stock with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, has a higher chance of beating on earnings, which is not the case here.
Earnings ESP: STERIS has an Earnings ESP of -0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this reporting cycle.
Argenx (ARGX - Free Report) has an Earnings ESP of +44.82% and a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company is expected to release fourth-quarter 2024 results shortly. The Zacks Consensus Estimate for EPS implies a surge of 196.4% from the year-ago quarter’s reported figure.
Arcutis Biotherapeutics (ARQT - Free Report) has an Earnings ESP of +7.97% and a Zacks Rank #2 at present. The company is expected to release its fourth-quarter 2024 results shortly. ARQT’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 17.46%.
Axogen (AXGN - Free Report) has an Earnings ESP of +36.36% and a Zacks Rank #3 at present. The company is expected to release fourth-quarter 2024 results shortly. The Zacks Consensus Estimate for EPS implies a surge of 166.7% from the year-ago quarter’s reported figure.