Jefferies upgrades Steris stock rating on valuation, easing headwinds
Jefferies raised Steris' stock rating to Buy from Hold, citing valuation improvements and decreasing headwinds. Analyst David Windley determined Steris offers a steady double-digit earnings-per-share growth rate at a discount to its average multiple. The upgraded price target of $305 implies a 15.4x EBITDA, outpacing the 14.7x average from 2023 to 2025.
Steris' valuation has shrunk by 10% over 18 months due to U.S. insurance losses and medtech volume concerns, which should ease as state OB3 flexibility and likely Democratic policies take effect. Healthcare consumables and services remain robust, growing at 9-10% in the first half of fiscal 2027. Steris' de-stocking of applied sterilization technologies is complete.
The acquisition of Xodus adds 3% to EPS in the first year and 1% in subsequent years. Steris has raised its dividend for 16 consecutive years, demonstrating financial stability. The Pro Research Report dives deeper into Steris' valuation and growth potential. Steris reported strong Q2 2027 results, exceeding expectations with $2.94 per share adjusted earnings and $1.6 billion in revenue.
The company also raised its full-year profit outlook. To fund acquisitions, Steris issued $1.5 billion in senior notes due in 2033 and 2036, with respective interest rates of 5.650% and 5.875%.
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