Analyst Matthew Mishan of KeyBanc Capital Markets says he has upgraded STERIS plc (NYSE:STE) because the timing is right for the company to catch up to the rest of the peer group.
Right now we have a “buy” rating on STERIS. We upgraded the stock about three weeks ago. It is the one company in the midcap world that has been left behind in this rally, as it has been integrating a very large, very complex acquisition over the course of the last 12 to 18 months.
They have missed expectations primarily because they were too optimistic in its outlook following the acquisition of Synergy Health. There was nothing fundamentally wrong with this company; it has actually had a very positive outlook and has a lot of really good businesses with market leadership.
For most companies, 5% growth is fairly good, but in the context of the promising 7% growth to start off last year, it changes expectations. The company has been through a lot of the integration and divested several underperforming businesses. Post those changes, management focus is now back to revenue growth, and we believe the timing is right for it to play catch-up to the rest of its peer group.
