STERIS Gains From Expanded Product Offerings Amid Macro Issues

STERIS STE new acquisitions and partnerships have been strengthening its product offerings. However, macroeconomic challenges continue to dampen growth. The stock carries a Zacks Rank #3 (Hold).Factors Driving STERIS' GrowthSTERIS frequently engages in strategic acquisitions and joint ventures to optimize its portfolio of businesses. In recent years, the company has made several large acquisitions. It purchased the surgical instrumentation, laparoscopic instrumentation and sterilization container assets from Becton, Dickinson and Company or BD. The acquisition strengthens, complements and expands STERIS’ Healthcare product offerings with renowned brands like V. Mueller, Snowden-Pencer and Genesis. The company is poised for another strong fiscal year, with reported revenues from continuing operations expected to grow 6% to 7%.The company’s Healthcare segment is gaining from the successful market adoption of its comprehensive offerings, including infection prevention consumables and capital equipment. Further, its services to maintain that equipment, repair reusable procedural instruments and outsource instrument reprocessing services are gaining traction. For the fiscal second quarter of 2025, Healthcare reported revenue growth of 9% year over year. This outperformance reflected a 12% improvement in consumable revenues and 14% growth in service revenues, with both segments posting strong organic revenue growth.The Applied Sterilization Technologies (AST) division experienced 9% reported growth year over year in the second quarter of fiscal 2025. This performance was driven by a 6% increase in service revenues and a significant improvement in capital equipment revenues. Constant currency organic revenues in the fiscal second quarter were in the high single digits. STERIS experienced its first signs of increased bioprocessing demand. Meanwhile, global MedTech customers were stable. The company expects bioprocessing revenues to grow in the second half of fiscal 2025.Year to date, shares of STE dropped 1.7% against the industry’s 4.9% growth. However, as the company continues to experience increased bioprocessing demand, this might help the AST business to gain further momentum. Added to this, several strategic acquisitions and partnerships are expected to help the stock to get back to an uptrend in the coming days.STERIS plc Price STERIS plc price | STERIS plc QuoteConcerning Factors For STEThe current macroeconomic environment across the globe has affected STERIS’ financial operations. Governments and insurance companies continue to look for ways to contain the rising cost of healthcare. This is putting significant pressure on players in the healthcare industry, with STERIS being no exception. Increases in prices or decreases in the availability of raw materials and oil and gas have also historically impaired STERIS’ procurement of necessary materials for product manufacture, leading to an increase in production costs. In addition, economic and market volatility have been affecting the investment portfolio of STERIS’ legacy defined benefit pension plan. We are concerned that lingering macroeconomic softness might hamper STERIS’ growth.These macroeconomic factors are also resulting in a significant escalation in the company’s operating expenses. STERIS witnessed a 0.3% year-over-year rise in selling, general and administrative expenses in the fiscal second quarter. Our model projects a 10.9% increase in the company’s selling, general and administrative expenses for fiscal 2025.Further, with nearly 30% of the company’s revenues and costs of revenues being generated outside the United States, foreign currency exchange rate fluctuations can significantly impact its financial position, results of operations and competitive position. For most operations, local currencies have been determined as functional currencies. For instance, the ongoing geopolitical instability, such as Russia’s invasion of Ukraine, has negatively impacted the global and U.S. economies, leading to supply-chain disruptions, rising interest rates, volatility in capital markets and foreign currency exchange rates, and heightened cybersecurity risks. In the fiscal second quarter of 2025, the company’s revenues were negatively impacted by currency fluctuations of nearly $2.1 million.Key PicksSome better-ranked stocks in the broader medical space are Penumbra PEN, Haemonetics HAE and Phibro Animal Health PAHC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Penumbra shares have dropped 7.6% in the past year. Estimates for the company’s 2024 earnings per share have increased 2 cents to $2.81 in the past 30 days. PEN’s earnings beat estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 10.54%. In the last reported quarter, it posted an earnings surprise of 23.19%.Estimates for Haemonetics’ fiscal 2025 earnings per share have remained constant at $4.59 in the past 30 days. Shares of the company have dropped 10.9% in the past year against the industry’s growth of 11.3%. HAE’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 2.82%. In the last reported quarter, it delivered an earnings surprise of 2.75%.Estimates for Phibro Animal Health’s fiscal 2025 earnings per share have increased 1.9% to $1.62 in the past 30 days. Shares of the company have surged 85.6% in the past year compared with the industry’s 11.3% rise. PAHC’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 25.47%. In the last reported quarter, it delivered an earnings surprise of 52.17%.Zacks Naming Top 10 Stocks for 2025Want to be tipped off early to our 10 top picks for the entirety of 2025?History suggests their performance could be sensational.From 2012 (when our Director of Research Sheraz Mian assumed responsibility for the portfolio) through November, 2024, the Zacks Top 10 Stocks gained +2,112.6%, more than QUADRUPLING the S&P 500’s +475.6%. Now Sheraz is combing through 4,400 companies to handpick the best 10 tickers to buy and hold in 2025. Don’t miss your chance to get in on these stocks when they’re released on January 2.Be First to New Top 10 Stocks >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Haemonetics Corporation (HAE): Free Stock Analysis Report STERIS plc (STE): Free Stock Analysis Report Phibro Animal Health Corporation (PAHC): Free Stock Analysis Report Penumbra, Inc. (PEN): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks