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Steris Poor Q2 Disappoints, Synergy Health Raises Hope
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On Dec 7, we issued an updated research report on OH-based STERIS plc (STE - Free Report) – a manufacturer and marketer of infection prevention, decontamination, microbial reduction, along with surgical and gastrointestinal support products and services. The company currently carries a Zacks Rank #3 (Hold).
Throughout the last six months, Steris underperformed the Zacks categorized Medical Instrument Market with respect to price movement. Situation deteriorated further in November with Steris reporting a dismal second-quarter fiscal 2017 performance with respect to both earnings and revenues. Lowered revenue guidance for fiscal 2017 is indicating a further slash in the share price return performance.
Also, the earnings estimate revision trend was down 3% over the last one month. As per the last trading price, the company's stock lost 8.1% as compared to 6.3% loss of the broader industry over the last six months.
However, in the face of currency and market headwinds, STERIS’ business grew both organically and through strategic acquisitions. Synergy Health – acquired last year – was one of the primary contributors to the strong double-digit revenue growth of the combined company. Management expects Synergy to contribute between $640–$650 million in fiscal 2017 which translates into low-single-digit sales growth.
STERIS has always been on track with its strategy of acquisitions for growth. In Jul 2016, the company bought Medisafe Holdings, which is a U.K.-based manufacturer of washer disinfector equipment and also markets related consumables and services. Per management, Medisafe’s products and services complement STERIS’ global healthcare offering by providing washer R&D and production in the U.K.
However, currency has been a major obstacle to STERIS' growth for quite some time. Also, with rapidly aging population a greater number of individuals are entering into their prime healthcare consumption years. Yet, governments and insurance companies’ consistent efforts to contain the rising cost of healthcare, has been putting a lot of pressure on STERIS. Moreover, customer consolidation remains a concern.
Zacks Rank and Key Picks
STERIS currently holds a Zacks Rank #4 (Sell). Some favorably ranked medical stocks are NxStage Medical Inc. , Baxter International Inc. (BAX - Free Report) and Bovie Medical Corporation . NxStage Medical and Baxter International sport a Zacks Rank #1 (Strong Buy) while Bovie Medical carries a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
NxStage Medical surged 29.9% over the last one year compared to the S&P 500’s 9.5% over the same period. The company has a four-quarter average positive earnings surprise of 46.3%.
Baxter International rallied 23.9% over one year, much higher than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 27%.
Bovie Medical recorded a 119.4% gain in the past one year, way better than the S&P 500’s 5.9%. The company has a trailing four-quarter positive average earnings surprise of 28.7%.
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Steris Poor Q2 Disappoints, Synergy Health Raises Hope
On Dec 7, we issued an updated research report on OH-based STERIS plc (STE - Free Report) – a manufacturer and marketer of infection prevention, decontamination, microbial reduction, along with surgical and gastrointestinal support products and services. The company currently carries a Zacks Rank #3 (Hold).
Throughout the last six months, Steris underperformed the Zacks categorized Medical Instrument Market with respect to price movement. Situation deteriorated further in November with Steris reporting a dismal second-quarter fiscal 2017 performance with respect to both earnings and revenues. Lowered revenue guidance for fiscal 2017 is indicating a further slash in the share price return performance.
Also, the earnings estimate revision trend was down 3% over the last one month. As per the last trading price, the company's stock lost 8.1% as compared to 6.3% loss of the broader industry over the last six months.
STERIS PLC Price
STERIS PLC Price | STERIS PLC Quote
However, in the face of currency and market headwinds, STERIS’ business grew both organically and through strategic acquisitions. Synergy Health – acquired last year – was one of the primary contributors to the strong double-digit revenue growth of the combined company. Management expects Synergy to contribute between $640–$650 million in fiscal 2017 which translates into low-single-digit sales growth.
STERIS has always been on track with its strategy of acquisitions for growth. In Jul 2016, the company bought Medisafe Holdings, which is a U.K.-based manufacturer of washer disinfector equipment and also markets related consumables and services. Per management, Medisafe’s products and services complement STERIS’ global healthcare offering by providing washer R&D and production in the U.K.
However, currency has been a major obstacle to STERIS' growth for quite some time. Also, with rapidly aging population a greater number of individuals are entering into their prime healthcare consumption years. Yet, governments and insurance companies’ consistent efforts to contain the rising cost of healthcare, has been putting a lot of pressure on STERIS. Moreover, customer consolidation remains a concern.
Zacks Rank and Key Picks
STERIS currently holds a Zacks Rank #4 (Sell). Some favorably ranked medical stocks are NxStage Medical Inc. , Baxter International Inc. (BAX - Free Report) and Bovie Medical Corporation . NxStage Medical and Baxter International sport a Zacks Rank #1 (Strong Buy) while Bovie Medical carries a Zacks Rank #2 (Buy). You can seethe complete list of today’s Zacks #1 Rank stocks here.
NxStage Medical surged 29.9% over the last one year compared to the S&P 500’s 9.5% over the same period. The company has a four-quarter average positive earnings surprise of 46.3%.
Baxter International rallied 23.9% over one year, much higher than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 27%.
Bovie Medical recorded a 119.4% gain in the past one year, way better than the S&P 500’s 5.9%. The company has a trailing four-quarter positive average earnings surprise of 28.7%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>