We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
STERIS Focuses on Expanding Core Business, Competition Rife
Read MoreHide Full Article
On Feb 26, we issued an updated research report on STERIS plc (STE - Free Report) . The company has been actively trying to expand into adjacent markets and strengthen core business through acquisitions and dilutions. However, the company operates in a tough competitive landscape, which is a concern. The stock carries a Zacks Rank #3 (Hold).
This developer, manufacturer and marketer of infection prevention, decontamination, microbial reduction, and surgical and gastrointestinal support products and services has outperformed the industry over the past year. The stock has gained 31.5% compared with the industry’s 16.5% rally.
STERIS exited third-quarter fiscal 2018 on a mixed note, with earnings beating the Zacks Consensus Estimate and revenues missing the same. We are encouraged by the favorable underlying market trends along with the new product and service offerings. The company’s organic growth was strong across specialty services, life sciences and applied sterilization segments.
We are particularly upbeat about STERIS’ six acquisitions in the first nine months of fiscal 2018. Through these buyouts, the company aims to strengthen the Healthcare Products, Healthcare Specialty Services and the Applied Sterilization Technologies businesses.
Furthermore, financed with both cash on hand and credit facility borrowings, the company had to incur acquisition cost of around $51.6 million, net of cash acquired and including potential contingent consideration of $5.3 million.
We believe STERIS can pursue back-to-back acquisitions in the long run in order to expand business and customer base, courtesy of its strong financial position.
We are also encouraged by the company’s recent organizational changes to serve customers in a better way. We also expect this move to enhance the company’s cost structure. Further, growth in free cash flow reserve is indicative of the company’s strong cash balance.
Meanwhile, STERIS competes for pharmaceutical, research and industrial customers against several large companies that have extensive product portfolios and global reach, as well as a number of small companies with limited product offerings and operations in one or a few countries.
The company expects to face intense competition as new infection prevention, sterile processing, contamination control, gastrointestinal and surgical support products and services enter the market. This might hamper STERIS’ growth considerably.
Moreover, a number of STERIS’ customers are undergoing consolidation, partly due to healthcare cost reduction measures initiated by competitive pressure as well as legislators, regulators and third-party payors. We believe if the company fails to check the rate of its customer consolidation now, it will adversely affect its business as well as financial condition.
Key Picks
Some better-ranked stocks in the broader medical sector are PerkinElmer , Bio-Rad Laboratories (BIO - Free Report) and Becton, Dickinson and Company (BDX - Free Report) .
PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2 (Buy).
Becton, Dickinson and Company is a Zacks #2 Ranked player. The company has a long-term expected earnings growth rate of 13.3%.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Image: Bigstock
STERIS Focuses on Expanding Core Business, Competition Rife
On Feb 26, we issued an updated research report on STERIS plc (STE - Free Report) . The company has been actively trying to expand into adjacent markets and strengthen core business through acquisitions and dilutions. However, the company operates in a tough competitive landscape, which is a concern. The stock carries a Zacks Rank #3 (Hold).
This developer, manufacturer and marketer of infection prevention, decontamination, microbial reduction, and surgical and gastrointestinal support products and services has outperformed the industry over the past year. The stock has gained 31.5% compared with the industry’s 16.5% rally.
STERIS exited third-quarter fiscal 2018 on a mixed note, with earnings beating the Zacks Consensus Estimate and revenues missing the same. We are encouraged by the favorable underlying market trends along with the new product and service offerings. The company’s organic growth was strong across specialty services, life sciences and applied sterilization segments.
We are particularly upbeat about STERIS’ six acquisitions in the first nine months of fiscal 2018. Through these buyouts, the company aims to strengthen the Healthcare Products, Healthcare Specialty Services and the Applied Sterilization Technologies businesses.
Furthermore, financed with both cash on hand and credit facility borrowings, the company had to incur acquisition cost of around $51.6 million, net of cash acquired and including potential contingent consideration of $5.3 million.
We believe STERIS can pursue back-to-back acquisitions in the long run in order to expand business and customer base, courtesy of its strong financial position.
We are also encouraged by the company’s recent organizational changes to serve customers in a better way. We also expect this move to enhance the company’s cost structure. Further, growth in free cash flow reserve is indicative of the company’s strong cash balance.
Meanwhile, STERIS competes for pharmaceutical, research and industrial customers against several large companies that have extensive product portfolios and global reach, as well as a number of small companies with limited product offerings and operations in one or a few countries.
The company expects to face intense competition as new infection prevention, sterile processing, contamination control, gastrointestinal and surgical support products and services enter the market. This might hamper STERIS’ growth considerably.
Moreover, a number of STERIS’ customers are undergoing consolidation, partly due to healthcare cost reduction measures initiated by competitive pressure as well as legislators, regulators and third-party payors. We believe if the company fails to check the rate of its customer consolidation now, it will adversely affect its business as well as financial condition.
Key Picks
Some better-ranked stocks in the broader medical sector are PerkinElmer , Bio-Rad Laboratories (BIO - Free Report) and Becton, Dickinson and Company (BDX - Free Report) .
Bio-Rad Laboratories has a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company has a long-term expected earnings growth rate of 25%.
PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2 (Buy).
Becton, Dickinson and Company is a Zacks #2 Ranked player. The company has a long-term expected earnings growth rate of 13.3%.
Zacks Top 10 Stocks for 2018
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2018?
Last year's 2017 Zacks Top 10 Stocks portfolio produced double-digit winners, including FMC Corp. and VMware which racked up stellar gains of +67.9% and +61%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2018 today >>