On Monday, Piper Sandler maintained a Neutral stance on STERIS (NYSE:STE), with the price target remaining at $225.00. The firm's updates to the STERIS financial model reflect recent historical restatements shared by the company's management alongside its fourth fiscal quarter results. Adjustments were also made to account for the completed sale of the Dental segment at the end of May, which resulted in approximately $800 million used for early debt reduction.
The balance sheet and interest expense assumptions for STERIS have been revised following the Dental division's sale, which concluded last week. This transaction, which brought in roughly $800 million, led to an expedited debt paydown, occurring a month sooner than Piper Sandler had initially anticipated.
In addition to the balance sheet changes, Piper Sandler slightly modified operating expense (opex) projections for the current fiscal year. These tweaks were made to neutralize a minor $0.02 benefit in their model, which originated from the earlier-than-expected debt repayment. Consequently, the earnings per share (EPS) forecasts for fiscal years 2025 and 2026 remain unaltered at $9.15 and $10.07, respectively.
It's important to note that while these updates have been integrated into the financial model, Piper Sandler has not made any changes to the forward revenue projections for STERIS. The company's performance and financial outlook, as revised by these adjustments, continue to be monitored by the firm under the same projected revenue trajectory as before.
STERIS, a leader in infection prevention, decontamination, and surgical and critical care, has thus seen no alteration in the anticipated value of its shares in the near term, as indicated by the steady price target. The adjustments made by Piper Sandler are primarily internal to the financial modeling and do not impact the overall valuation or market expectations for the company.
In other recent news, STERIS, a key player in healthcare equipment, has reported robust fourth-quarter results, exceeding expectations mainly due to strong healthcare equipment deliveries. The company's total revenue saw a 10% increase in the quarter, with adjusted earnings per diluted share reaching $2.58. For the full fiscal year, STERIS posted a 12% increase in total revenue and adjusted earnings per diluted share of $8.83. The company's Healthcare segment was particularly noteworthy, achieving a 7% constant currency organic revenue growth.
In response to these developments, Piper Sandler adjusted its outlook on STERIS, raising the price target to $225.00 from the previous $220.00, while maintaining a neutral rating. This adjustment comes as STERIS provided revenue and earnings per share guidance for fiscal year 2025 that was higher than anticipated.
STERIS is optimistic about fiscal 2025, projecting continued revenue growth and an increase in adjusted earnings per diluted share. The company also announced a restructuring plan focusing on core customers for sustainable growth. These are recent developments that have drawn significant attention from investors.
InvestingPro Insights
STERIS's commitment to shareholder returns is underscored by its impressive track record of raising dividends, now in its 13th consecutive year. This is a testament to the company's financial health and its management's confidence in sustaining growth, which can be a reassuring signal for investors. Additionally, the company's stock is currently trading at a P/E ratio of 40.87, which, when considered alongside the projected near-term earnings growth, suggests it may be at a low P/E relative to its growth potential.
InvestingPro data highlights a robust financial position for STERIS, with a market capitalization of $22.44 billion and a healthy gross profit margin of 43.52% over the last twelve months as of Q4 2024. Furthermore, the company has shown a solid revenue growth of 13.28% in the same period, indicating its ability to expand its business successfully. For investors seeking stability, STERIS's low price volatility, as indicated by InvestingPro Tips, may be an attractive characteristic.
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