Steris Delivered Strong Q4 Performance, But Analyst Call FY24 Outlook Mixed

Steris Plc STE reported Q4 FY23 adjusted EPS of $2.30, beating the consensus of $2.15 and up from $2.04 reported a year ago.

The company reported sales of $1.38 billion, up 14.4% Y/Y, beating the consensus of $1.27 billion.

Organic revenue growth improved to 15.9%, driven by Healthcare, AST, and Life Sciences.

"Heading into fiscal 2024, we are optimistic that many of the challenges we faced in fiscal 2023 are abating, including procedure volumes and supply chain constraints. As a result, we look forward to another year of record performance," said Dan Carestio, President and CEO.

Needham notes that Steris' gross margin was 43.1% (down 240 bps Y/Y), below the consensus of 44.2%. The operating margin was 23.8% (up 20 bps Y/Y) and below the consensus of 24.0%. The analyst keeps a Hold rating.

Guidance: For fiscal 2024, Steris expects revenues to increase 7-8%, reflecting the anticipated positive impact of foreign currency fluctuations.

Constant currency organic revenue growth is anticipated to increase by 6-7%.

FY24 adjusted EPS is expected to be $8.55-$8.75, versus a consensus of $8.75. 

Needham writes that the management's initial FY24 revenue guidance was above consensus, while the mid-point of its initial FY24 EPS guidance was slightly below consensus. 

JMP Securities reiterates Market Outperform on Steris, and maintains the price target of $240.

Price Action: STE shares are up 9.83% at $207.56 on the last check Thursday.