On Sep 25, we issued an updated research report on STERIS plc (NYSE:STE) — 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).
Over the last three months, this Ohio-based company has been trading above the broader industry. The stock has gained 4.7% in contrast to a 0.2% slip of the broader industry during the period.
We are impressed with the company’s persistently strong organic growth performance across all segments. Also, gross and operating margins expanded year over year. Recently, the company made a couple of organizational changes to serve customers in a better way. We expect this move to enhance the company’s cost structure as well. Further, growth in free cash flow reserve is indicative of the company’s strong cash balance.
However, we note that the government and insurance companies’ consistent efforts to curb healthcare costs have been putting pressure on the stock for quite some time. We are also concerned about the current customer consolidation scenario, which will continue to affect the company, unless checked immediately. The competitive landscape and weak cost reduction initiatives are other overhangs.
Key Picks
Some better-ranked medical stocks are Chemed Corporation (NYSE:CHE) , IDEXX Laboratories, Inc (NASDAQ:IDXX) and Amedisys, Inc. (NASDAQ:AMED) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Chemed has a long-term expected earnings growth rate of 10%. The stock has gained roughly 4.2% over the last six months.
IDEXX Laboratories has a long-term expected earnings growth rate of 19.8%. The stock has surged around 36.4% over the last year.
Amedisys has a long-term expected earnings growth rate of 18.2%. The stock has rallied around 10.3% over the last year.
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IDEXX Laboratories, Inc. (IDXX): Free Stock Analysis Report
Amedisys Inc (AMED): Free Stock Analysis Report
Chemed Corp. (CHE): Free Stock Analysis Report
STERIS PLC (STE): Free Stock Analysis Report
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