Jefferies Cuts Price Target on Stericycle (SRCL) to $112.50; Reiterates Buy
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Jefferies maintained a Buy rating on Stericycle (NASDAQ: SRCL), and cut the price target to $112.50 (from $125.00), after traveling with management. Based on management's comments, Jefferies estimates the total revenue drag from lower SQ pricing to be $70-73M, spread over a four year period.
Analyst Sean Dodge commented, "We traveled with CEO Charlie Alutto. Concerns around domestic SQ pricing and volatility in non-core businesses remain the biggest overhangs. We peg the total pricing drag to be $70-73M spread over four years—importantly, the '16 impact is already fully reflected in guidance. SRCL continues to take steps to simplify its model and constrain future volatility. An increasing emphasis on margins should drive considerable EBITA expansion over the next 3+ years."
Shares of Stericycle closed at $83.49 yesterday.
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