Shares of Steris Plc STE touched a new 52-week high of $78.77 in mid-day trading on Dec 30. The bullish run reflects investors’ optimism about the company’s recently revealed fiscal 2016 outlook, following the completion of the much talked $1.9 billion alliance between Steris and UK-based outsourced sterilization services provider, Synergy Health.
In fact, the company’s shares have witnessed a strong 8.1% uptrend since the revenue guidance announcement on Dec 22.
The company’s shares closed at $76.95 yesterday, translating into a decent one-year return of around 18.1%. The year-to-date return on the stock is also impressive at 18.7%. Currently, this UK-based medical equipment manufacturer has a market cap of $6.6 billion, while the average volume of shares traded over the past 10 days is nearly 0.7million.
On Dec 22, STERIS announced an optimistic fiscal 2016 outlook, which represented solid underlying performance from both STERIS and Synergy Health’s businesses, and a cost synergy leverage of a partial year owing to the combination and recent tax legislation.
Notably, although the merger is still at an early stage, STERIS’ management is upbeat about the company’s progress on the integration procedure, which is also in line with management’s expectation.
For fiscal 2016, STERIS expects to deliver adjusted EPS in the range of $3.48–$3.55 and revenue growth of 21–22%. The current 2016 Zacks Consensus Estimate for STERIS is pegged at $3.52 for EPS (within the predicted range) and $2.26 billion for revenues.
Moreover, the company expects an adjusted effective tax rate of approximately 27.5% for fiscal 2016, while free cash flow is anticipated to be approximately $155 million. The free cash flow outlook includes about $45 million in acquisition-related expenses and approximately $135 million in capital expenditures.
In addition, the company has announced that from the third quarter of fiscal 2016, STERIS will effectively operate in four business segments: Healthcare Products, Healthcare Specialty Services, Applied Sterilization Technologies, and Life Sciences.
Over the last 30 days, the Zacks Consensus Estimate for fiscal 2016 and 2017 for STERIS improved 9% to $3.52 and 6.5% to $3.95 per share, respectively.
Zacks Rank
Currently, STERIS has a Zacks Rank #1 (Strong Buy). Other top-ranked medical instruments stocks include Masimo Corporation MASI, Exactech Inc. EXAC and EnteroMedics Inc. ETRM. All three stocks sport the same Zacks Rank as STERIS.
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