Imperial Capital Cuts Price Target on Stericycle (SRCL) to $80; Reiterates Underperform

Imperial Capital maintained an Underperform rating on Stericycle (NASDAQ: SRCL), and cut the price target to $80.00 (from $93.50), as headwinds persist. Despite the adjustments, Imperial expects SRCL to remain a leading global provider of medical waste and related services, and awaits a reacceleration in earnings growth and-or improvement in visibility, before becoming more positive.

Analyst Scott Levine commented, "Over the past 4-6 quarters, SRCL has experienced headwinds in several of its businesses, including domestic medical waste (pricing), international medical waste (U.K. patient transport, LatAm cost recovery), hazardous waste (industrial slowdown), and Shred-it (synergy delays). Although visibility is limited regarding the potential pace of stabilization and/or recovery, we think the pressure will likely linger in the near term (particularly in core med waste), and we are reducing our EPS estimates, primarily to reflect a more gradual recovery in margins (we now assume 60bp of EBITDA margin expansion in FY17, and 120bp in FY18). Our FY16 EPS estimate falls to $4.65 from $4.68 (slightly below guidance of $4.68-4.75), our FY17 estimate falls to $5.00 from $5.26, and FY18 EPS falls to $5.65 from $6.00. We think SRCL will likely provide initial FY17 guidance on its 3Q16 earnings call."

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 $82.64 yesterday.

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