STERIS Faces Challenges Amid Market Fluctuations
STERIS plc, based in Mentor, Ohio, is a global leader in infection prevention products and services. The company, with a market capitalization of $20.7 billion, operates in three main segments: Healthcare, Applied Sterilization Technologies (AST), and Life Sciences.
Large-Cap Status and Market Presence
Being categorized as a “large-cap stock,” STERIS has a significant influence in the medical devices sector, serving hospitals, healthcare providers, and pharmaceutical companies worldwide.
Recent Stock Performance
However, STERIS has experienced a notable decline, dropping 16.6% from its 52-week high of $248.24 on September 13. Over the past three months, the stock has decreased nearly 13.2%, underperforming compared to the Nasdaq Composite’s ($NASX) 10.4% rise.
Year-to-Date and Annual Trends
Longer-term performance also shows a struggling trend for STERIS. Year-to-date, the stock has declined over 5.8%, with a nearly 4% drop over the last year, in stark contrast to the NASX’s impressive 29.2% increase in 2024 and 30.1% growth over the past year.
Technical Indicators
Supporting this bearish view, STERIS has remained below its 50-day moving average throughout October and has consistently traded below its 200-day moving average since early November.
Mixed Q2 Results Impact Stock Price
Following the release of mixed results for its second quarter on November 6, STERIS stock tumbled nearly 5.3%. The company’s total revenue rose by 7.3% year-over-year to $1.3 billion, but this fell short of Wall Street’s expectations by 60 basis points. An 8.4% increase in the cost of revenues to $750.1 million led to a contraction in gross margin by 56 basis points to 43.6%, resulting in a modest 6% growth in gross profit to $578.8 million, which disappointed investors.
Expense Management in Focus
On a brighter note, STERIS showcased strong expense management by significantly reducing both operating and non-operating costs. This effort resulted in a 15.1% year-over-year growth in adjusted EPS to $2.14, surpassing analysts’ expectations by 1.4%.
Peer Comparison and Analyst Outlook
In comparison to its competitor Zimmer Biomet Holdings, Inc. (ZBH), which has seen a 13% decline year-to-date and a 10.9% drop over the past year, STERIS has fared slightly better. Among the seven analysts covering STE stock, the consensus rating stands at “Strong Buy,” with a mean price target of $255.83, indicating a potential 23.6% increase from current levels.
On the date of publication, Aditya Sarawgi did not hold (either directly or indirectly) any positions in the securities mentioned in this article. All information in this article is for informational purposes only. For more details, please refer to the Barchart Disclosure Policy here.
The views expressed by the author do not necessarily reflect those of Nasdaq, Inc.
