Wedbush Cuts Price Target on Stericycle (SRCL) to $82; Reiterates Neutral
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Wedbush maintained a Neutral rating on Stericycle (NASDAQ: SRCL), and cut the price target to $82.00 (from $85.00), following the company's investor day. Management clarified the impact from the pricing environment within RMW and specifically the small quantity generator headwinds.
Analyst Al Kaschalk commented, "Despite being forthright with headwinds in the current environment during its investor day, Stericycle’s (SRCL) five-year strategic outlook of calling for organic EPS compounded annual growth rate (CAGR) of 4-8% on sales growth of 3-5% is back-end weighted. Continuous improvement, growth drivers in small healthcare provider segment and acquisitions could add 3-5 percentage points implying EPS CAGR of 7-13% over the forecast period. While the EPS CAGR is generally consistent with the 10-14% we were looking for ahead of the analyst day, annual EPS growth is expected to struggle to exceed 3-4% before mid-CY18. Accordingly, we would avoid shares of SRCL until there is improved pricing environment within core medical waste business, strategic rationale for hazardous waste network (primarily industrial footprint) is completed and International platform enjoys added services to its existing customer base."
Shares of Stericycle closed at $75.00 yesterday.
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