Company Reports

Steris is a leading provider of sterilization products and services to healthcare organizations, biopharma producers, and device manufacturers. The company also has a strong presence across operating rooms and endoscopy centers. Over the past few years, Steris has closed several acquisitions to enhance its healthcare offerings. With more procedures shifting to an outpatient setting, we think Steris’ expanded product portfolio positions itself as a “one-stop shop” that supplies mission-critical sterilization equipment and services. The burgeoning ambulatory surgery centers and physicians’ offices should benefit the most when sourcing from Steris, as they don’t necessarily have the capacity to deal with multiple vendors.

We are refreshing our views on Steris and reaffirming our narrow moat rating with a $231 fair value estimate. The company's narrow moat comes from strong switching costs for its end users, namely healthcare providers, biopharma companies, and device manufacturers. We think that future product line expansions, as well as increased contract sterilization capacities, should support our mid- to high-single-digit revenue growth forecast over the next five years.

We are dropping coverage of Steris. We provide broad coverage of more than 1,500 companies globally and periodically adjust our coverage according to investor interest and staffing.

While narrow-moat Steris' results did not quite meet our expectations in the fiscal first quarter and also fell short of FactSet-aggregated consensus, this was not enough to move the needle on our $201 fair value estimate. The shares now look fairly valued.

Steris, domiciled in Ireland and headquartered in Mentor, Ohio, is a dominant force in medical device sterilization, sterilizing one third of all medical devices in the world. Because it offers a full suite of sterilization solutions, from the sale of individual sterilizers to full outsourcing, Steris benefits regardless of how hospitals choose to manage sterilization. Steris also has a strong presence in the operating room, with a near 50% share of U.S. operating room capital equipment, including surgical tables and lights.

Narrow-moat Steris ended the fiscal year on a high note with top-line outperformance, and while reported margin was lower on a year-over-year basis, this was mainly due to costs from the Cantel integration, and margin expanded on an adjusted basis. After rolling our model, we are increasing our fair value estimate to $201 per share from $189, and see shares as fairly valued.

Narrow-moat Steris had a good fiscal third quarter, moderately exceeding both our expectations and consensus aggregated by FactSet. While operating costs were a bit higher than anticipated--due to inflation and acquisition costs--sales growth was strong, and there is no change to our $189 fair value estimate. We attribute the market’s positive reaction to the outperformance and raised outlook, though the quarter’s results don’t have a material impact on the firm’s long-term trajectory in our view, and shares remain overvalued.

Narrow-moat Steris’ fiscal second-quarter earnings beat consensus aggregated by FactSet, though results didn't quite meet our higher bar. We are maintaining our $189 fair value estimate. The slightly disappointing results, from our perspective, were offset in our model by time value of money, and some variability in the ongoing integrations of Cantel and Key. Shares still look moderately overvalued to us even after the 4% decline in the stock price on Nov. 3.

Narrow-moat Steris had a good start to its 2022 fiscal year, its first as a combined company with Cantel. We are maintaining our $189 fair value estimate, and we see shares as moderately overvalued after the stock’s 12% run since May.

Steris, domiciled in Ireland and headquartered in Mentor, Ohio, is a dominant force in medical device sterilization, sterilizing one third of all medical devices in the world. Because it offers a full suite of sterilization solutions, from the sale of individual sterilizers to full outsourcing, Steris benefits regardless of how hospitals choose to manage sterilization. Steris also has a strong presence in the operating room, with an approximate 50% share of U.S. operating room capital equipment, including surgical tables and lights.

Narrow-moat Steris ended the fiscal year in transition with the Cantel acquisition expected to close on June 2. We are maintaining our fair value estimate at $182, and we view shares as fairly valued following the stock’s recent slide.

Narrow-moat Steris reported decent fiscal third-quarter results that met expectations. We had previously updated our model to account for the pending Cantel Medical acquisition, and we are leaving our $181 fair value estimate unchanged. Shares remain fairly valued following the decline in the stock price at market open, which we attribute to Steris’ announcement of CEO Walt Rosebrough’s retirement.

Steris, domiciled in Ireland and headquartered in Mentor, Ohio, is a dominant force in medical device sterilization, sterilizing one third of all medical devices in the world. Because it offers a full suite of sterilization solutions, from the sale of individual sterilizers to full outsourcing, Steris benefits regardless of how hospitals choose to manage sterilization. Steris also has a strong presence in the operating room, with an approximate 50% share of U.S. operating room capital equipment, including surgical tables and lights.

Steris, domiciled in Ireland and headquartered in Mentor, Ohio, is a dominant force in medical device sterilization, sterilizing one third of all medical devices in the world. Because it offers a full suite of sterilization solutions, from the sale of individual sterilizers to full outsourcing, Steris benefits regardless of how hospitals choose to manage sterilization. Steris also has a strong presence in the operating room, with an approximate 50% share of U.S. operating room capital equipment, including surgical tables and lights.

Narrow-moat Cantel Medical agreed to be acquired by narrow-moat Steris on Tuesday, Jan. 12, creating a titan in the U.S. sterilization market. Steris will be acquiring Cantel in a $3.6 billion cash and stock transaction, including debt, and the deal is expected to close by the end of June. We think this is a good agreement for both Cantel and Steris, with Cantel shareholders getting a deal worth about $85 per share, a premium of 30% over our $65 fair value estimate, while the Cantel acquisition should help Steris cement its position as a leader in the U.S. infection control and prevention market. We are leaving our $175 fair value estimate on Steirs intact and raising our fair value estimate on Cantel to $85 per share, in line with the purchase price.

Narrow-moat Steris reported improved fiscal 2021 second-quarter results. While revenue and earnings increased compared with the year-ago period, the firm’s growth trajectory continues to be slowed by the ongoing COVID-19 pandemic. We are maintaining our $175 fair value estimate and believe the shares are fairly valued.

Narrow-moat Steris reported first-quarter 2021 earnings that made clear the firm is not immune to the ongoing pandemic and recession, despite showing impressive resiliency to end-fiscal 2020. While Steris experienced sales headwinds (down 3% on a constant currency basis), net income improved over the year-ago period, and we are increasing our fair value estimate to $175 from $165 on this durable profitability result, and with contract sterilization margin tracking ahead of our longer-term expectations. Shares remain fairly valued after this valuation upgrade, and the market now appears to share our view that Steris’ long-term outlook is relatively unaffected by the pandemic.

Steris, headquartered in Ireland, is a dominant force in medical device sterilization, sterilizing one third of all medical devices in the world. Because it offers a full suite of sterilization solutions, from the sale of individual sterilizers to full outsourcing, Steris benefits regardless of how hospitals choose to manage sterilization. Steris also has a strong presence in the operating room, with an approximate 50% share of U.S. operating room capital equipment, including surgical tables and lights.

Narrow-moat Steris had an impressive finish to fiscal 2020, exceeding our expectations on revenue and profits, and beating market consensus EPS compiled by Capital IQ. We had previously reduced our fair value estimate in light of the ongoing pandemic, and we are maintaining our current fair value estimate at $165 per share. We plan to review our model assumptions in detail once we get further clarity on COVID-19 impact over the next quarter. If Steris can maintain momentum into fiscal 2021, we anticipate an increase to our fair value estimate, though we expect any valuation changes to be in the low- to mid-single-digit range. After a near 40% plunge in the share price in late March, the market has come around to our view that Steris’ long-term outlook is relatively unaffected by the pandemic, and shares have traded upward and are now fairly valued, in our opinion, after trading below intrinsic value for much of the past two months.

Steris, headquartered in Ireland, is a dominant force in medical device sterilization, sterilizing one third of all medical devices in the world. Because it offers a full suite of sterilization solutions, from the sale of individual sterilizers to full outsourcing, Steris can benefit regardless of how hospitals choose to manage sterilization. Steris also has a strong presence in the operating room, with an approximate 50% share of U.S. operating room capital equipment, including surgical tables and lights.