UPDATE: Stifel Reiterates on Stericycle Following Revenue/EPS Miss, Unchanged Business Outlook

In a report published Thursday, Stifel analyst Shlomo Rosenbaum reiterated a Buy rating on Stericycle SRCL, and raised the price target from $123.00 to $138.00. In the report, Stifel noted, “Although revenue and EPS (normalizing for low tax rate) were lower than expected, and organic growth trended toward the low-end of the expected range, we believe the outlook for the company remains unchanged and would be buyers on the expected weakness. We view the organic growth slowdown as part of the normal business ebbs and flows (partially due to tougher comps in 2013 from Hazardous Waste strength in 2012) and do not believe it signals a change in SRCL's prospects. We view the solid acquisition quarter (17 acquisitions, mostly in the RMW and Compliance areas) as evidence that there are ample M&A targets available, and these acquisitions should fuel future organic growth as SRCL cross-sells and up-sells the acquisitions' clients. We are raising our target price from $123 to $138 as we roll the target price multiple onto our 2015 EPS estimates – our $138 target price represents a 29.3x EPS multiple on our $4.70 2015 EPS estimate (and 16.8x our 2015 EBITDA estimate). This multiple represents that average of the forward year multiple SRCL shares have traded at since the end of 2001, and is consistent with recent forward P/E and EBITDA multiples.” Stericycle closed on Wednesday at $120.87.