Goldman Sachs Downgrades Stericycle (SRCL) to Neutral

Goldman Sachs downgraded Stericycle (NASDAQ: SRCL) from Buy to Neutral with a price target of $126.00 (from $129.00).

Analyst Isaac Ro said, "We do not expect material upside from ACA in the near term while we believe potential upside from the PSC acquisition is already priced in and OUS margin dilution persists."

"Our upgrade to Buy was predicated upon our perception that the market underappreciated the durability of SRCL’s business model, tailwinds as businesses mix shifted to higher margin accounts, and continued roll-up potential. While we believe these long-term trends remain intact, SRCL shares are fairly valued, in our view, as we now believe these trends are better-recognized by consensus and we see limited upside to Street expectations. This is based on the following: (1) limited discovery value regarding potential upside from the recent PSC acquisition, (2) slower-than-anticipated P&L leverage associated with SRCL’s international expansion efforts, and (3) continued uncertainty regarding the long-term impact of healthcare reform on SRCL’s business model," he added.

For an analyst ratings summary and ratings history on Stericycle click here. For more ratings news on Stericycle click here.

Shares of Stericycle closed at $119.41 yesterday.

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