Sotera Health Has Favorable Setup Heading Into 2027, RBC Says

MT Newswires Live11-05

Sotera Health (SHC) has a favorable setup heading into 2027 for both organic and inorganic growth, given its clean balance sheet and free cash flow profile, RBC Capital Markets said in a Tuesday research report.

Commentary around faltering European medtech procedure volumes weighed on the stock, but EU medtech represents a small part of revenue and shouldn't be a major headwind, analysts wrote.

The company's Sterigenics unit revenue growth in Q3 reflects stability in the US medtech procedure volume market, according to the note.

FCF generation is expected to materially grow in 2027 as capex declines following the completion of ethylene oxide facility improvements in Q1 2027 and the end of cobalt-loading investments, the brokerage stated.

Sotera Health reported Q3 adjusted earnings Tuesday of $0.29 per diluted share, compared with $0.26 a year earlier. Analysts surveyed by FactSet expected $0.27.

The brokerage said it reiterated its outperform rating on the stock and price target of $24 per share.

Price: 16.53, Change: +0.49, Percent Change: +3.09

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