By Peet Serfontein & Zimele Mbanjwa
Steris plc is a leading provider of infection prevention, sterilisation, and surgical products and services. The company serves a broad range of industries, including healthcare, pharmaceuticals, and medical device manufacturing.
Steris offers its customers a unique mix of innovative products and services. These include consumable products, such as detergents, endoscopy accessories, barrier products, instruments and tools; services, including equipment installation and maintenance, microbial reduction of medical devices, instrument and scope repair, laboratory testing, and outsourced reprocessing; capital equipment, such as sterilisers, surgical tables, and automated endoscope reprocessors and connectivity solutions such as operating room integration.
Technically, the price is forming a trough in an Elliott wave, which presents a promising investment opportunity (see the insert on the main chart). Significant troughs like Wave 13 often signal the end of a corrective phase and the potential beginning of a new impulse wave to the upside. If this trough aligns with important Fibonacci retracement levels of the prior impulse wave, it further strengthens the case for a bullish reversal.
The price is between major support and resistance that acts as additional bullish support (see black converging trendlines on the main chart).
Further support is evidenced by a confluence of the stock's 200-day and 200-week simple moving averages (SMAs).
Fading downside price momentum, according to the Moving Average Convergence Divergence (MACD) histogram, and recent upward trajectory of the On-balance volume (OBV) indicator, support a bullish trend direction
| Share Information | |
|---|---|
| Share Code | STE |
| Industry | Health Care Equipment & Services |
| Market Capital (USD) | 21.44 billion |
| One Year Total Return | 2.07% |
| Return Year-to-Date | 5.66% |
| Current Price (USD) | 217.20 |
| 52 Week High (USD) | 248.24 |
| 52 Week Low (USD) | 197.82 |
| Financial Year End | March |
| The stock has gotten off to a decent start this year and various technical indicators point to continued upside. | |
| Consensus Expectations (Bloomberg) | ||||
|---|---|---|---|---|
| FY24 | FY25E | FY26E | FY27E | |
| Headline Earnings per Share (USD) | 8.83 | 9.05 | 9.66 | 10.27 |
| Growth (%) | 2.54 | 6.70 | 6.30 | |
| Dividend Per Share (USD) | 2.03 | 2.26 | 2.31 | 2.62 |
| Growth (%) | 11.23 | 2.21 | 13.30 | |
| Forward PE (times) | 23.99 | 22.48 | 21.15 | |
| Forward Dividend Yield (%) | 1.04 | 1.06 | 1.20 | |
| The group is expected to maintain steady earnings growth over the medium term, but behind its long-term double-digit adjusted EPS growth ambitions. | ||||
Buy/Sell Rationale:
Technical Analysis:
Fundamental view
| Share Name and Position | KMX US - Buy (Continue to hold) |
TDG US - Buy (Continue to hold) |
AMGN US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 76.44 | 1 292.86 | 267.10 |
| Current | 81.99 | 1 349.98 | 277.88 |
| Movement | +7.3% | +4.4% | +4% |
|
A developing ascending triangle pattern remains of interest. Remains above its 200-day simple moving average, however downside price momentum is concerning.
Our profit target remains at $90.00 with a trailing stop-loss at $76.80. Exit the trade by 31 January 2025. |
A smaller steep upward tilting inclining channel pattern remains of interest. Price is above its 200-day SMA. Fading downside price momentum is supportive.
Our profit target remains at $1 500.00 with a trailing stop-loss $1 276.00. Exit the trade by 14 February 2025. |
The price is in a steady upward trend, which remains of interest. Price is above its 200-week SMA. Fading downside price momentum is supportive.
Our profit target remains at $300.00 with a trailing stop-loss at $263.50. Exit the trade by 26 March 2025. |
| Share Name and Position | XLK US - Close (Time to exit) |
DOV US - Buy (Continue to hold) |
LHX US - Buy (Continue to hold) |
|---|---|---|---|
| Entry | 230.09 | 194.48 | 222.86 |
| Current | 241.82 | 199.15 | 219.79 |
| Movement | +5.1% | +2.4% | -1.4% |
| The trade has reached our proposed time to exit, and we closed the trade. |
Seasonal trends in the price remains of interest. Price is above its 200-day SMA. Fading downside price momentum is supportive.
Our profit target remains at $214.00 with a trailing stop-loss at $191. Exit the trade by 9 May 2025. |
A price action in a developing symmetrical triangle pattern remains of interest. The remains above its 200-week SMA. Fading downside price momentum supports the trade strategy.
Our profit target remains at $246.00 with a trailing stop-loss at $214. Exit the trade by 2 April 2025. |
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