Sotera Health (NASDAQ:SHC) received an upgrade from Jefferies on Monday, with the company’s analyst changing its rating from Hold to Buy. Along with this increase, Sotera Health’s stock price target was also raised to $15.50 from the previous $15.00.
The rating upgrade was driven by positive developments in three important areas that previously impacted Sotera Health’s performance. These include increased volumes of medical technology benefiting Steri/Nelson, which accounts for two-thirds of the company’s revenue, a rebound in the life sciences macro environment and lower interest rates.
The analyst noted that if the life sciences sector returns to historical growth rates, it could lead to significant growth for Sotera Health. Additionally, the company’s response to news of the Los Angeles litigation was considered excessive, according to the firm’s analysis.
Jefferies bases its valuation on a multiple of Sotera Health’s peers’ projected free cash flow in 2025, and also subtracts a quantification of the company’s exposure to litigation. This approach underpins the revised $15.50 price target and upgrade to Buy.
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