AST Business Growth & Strategic Acquisitions Support STERIS Stock

STERIS' STE new acquisitions and partnerships strengthen its product offerings. The stock carries a Zacks Rank #2 (Buy) currently.

Factors Driving STERIS' Growth

STERIS’ 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 fourth quarter of fiscal 2025, Healthcare reported revenue growth of 5% year over year. This outperformance indicated a 6% improvement in consumable revenues and 13% 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 fourth quarter of fiscal 2025. This performance was driven by a 6% increase in service revenues. Constant currency organic revenues were in high single digits. STERIS experienced its first signs of increased bioprocessing demand. Meanwhile, global demand from MedTech customers was stable. 

STERIS 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 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 approximately 6-7% in fiscal 2026. 

Over the past three months, shares of STE have risen 13.6% against the industry’s 11.8% dip. This impressive performance is largely fueled by sustained growth in bioprocessing demand, which continues to bolster the company’s AST segment. Additionally, STERIS’ momentum is being further supported by a series of strategic acquisitions and partnerships aimed at expanding its capabilities and market reach.

STERIS plc Price

STERIS plc price | STERIS plc Quote

Concerning Factors for STE

The 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 significantly putting 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.

Other Key Picks

Some other top-ranked stocks in the broader medical space are Hims & Hers Health HIMS, Phibro Animal Health PAHC and Prestige Consumer Healthcare PBH. Each of these carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Estimates for Hims & Hers Health’s 2025 earnings per share have jumped 21.2% to 63 cents in the past 30 days. Shares of the company have surged 255% in the past year compared with the industry’s 21.2% growth. Its earnings yield of 1.1% compares favorably with the industry’s -9.7% yield. HIMS’ earnings surpassed estimates in two of the trailing four quarters, matched in one and missed on another occasion, the average surprise being 19.6%.

Phibro Animal Health shares have rallied 31.3% in the past year. Estimates for the company’s fiscal 2025 earnings per share have jumped 3.6% to $2.01 in the past 30 days. PAHC’s earnings beat estimates in each of the trailing four quarters, the average surprise being 30.6%. In the last reported quarter, it posted an earnings surprise of 21.2%.

Estimates for Prestige Consumer Healthcare’sfiscal 2026 earnings per share have increased 1 cent to $4.77 in the past 30 days. Shares of the company have jumped 36.8% in the past year compared with the industry’s 10.8% growth. PBH’s earnings surpassed estimates in three of the trailing four quarters and matched on one occasion, the average surprise being 2.8%. In the last reported quarter, it delivered an earnings surprise of 1.5%.

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This article originally published on Zacks Investment Research (zacks.com).

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