Latest news with #Cobalt-60
Yahoo
26-06-2025
- Business
- Yahoo
Sotera Health Company's Q1 Earnings Call: Our Top 5 Analyst Questions
Sotera Health's first quarter results were well received by the market, as the company's revenue and non-GAAP profit surpassed Wall Street's expectations. Management credited this performance to stable demand across its sterilization and lab testing services, with Sterigenics benefiting from favorable pricing and steady volume trends. CEO Michael Petras highlighted the company's ability to deliver 'mid-single digit top-line growth and double-digit bottom line growth on a constant currency basis,' while also noting strong customer relationships and operational execution as contributing factors. Notably, the Nordion segment saw higher-than-anticipated revenue due to a shift in the timing of Cobalt-60 shipments, though this is expected to balance out over the coming quarters. Is now the time to buy SHC? Find out in our full research report (it's free). Revenue: $254.5 million vs analyst estimates of $246.9 million (2.6% year-on-year growth, 3.1% beat) Adjusted EPS: $0.14 vs analyst estimates of $0.12 (14.9% beat) Adjusted EBITDA: $121.8 million vs analyst estimates of $113.6 million (47.9% margin, 7.2% beat) Management reiterated its full-year Adjusted EPS guidance of $0.73 at the midpoint Operating Margin: 22.4%, in line with the same quarter last year Organic Revenue rose 3.5% year on year (12.1% in the same quarter last year) Market Capitalization: $3.16 billion While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention. Patrick Donnelly (Citi) asked about the potential impact of tariffs and the company's confidence in navigating them. CEO Michael Petras replied that current tariff policies are not expected to materially affect operations, with most revenue shielded by service-based business and trade agreements. Brett Fishbin (KeyBanc) inquired about drivers of Nelson Labs' margin improvement and future trajectory. CFO Jonathan Lyons explained that stable labor, lab optimization, and regulatory-driven volume growth have supported margin gains, with continued progress expected. Matt Sykes (Goldman Sachs) questioned the legal risk strategy and cross-selling between Nelson Labs and Sterigenics. CEO Michael Petras emphasized confidence in defending legal claims and pointed to ongoing incentives and integration efforts to deepen cross-segment customer relationships. Luke Sergott (Barclays) sought clarification on margin sustainability, particularly after the Nordion shipment timing shift. CEO Michael Petras stated that margin improvement will be primarily sustained by Nelson Labs, with other segments remaining stable. Jason Bednar (Piper Sandler) asked about pricing stability in Sterigenics and potential customer pushback. CEO Michael Petras confirmed that price levels are defensible and consistent with long-term targets, with ongoing discussions reflecting the value delivered to customers. In future quarters, the StockStory team will pay close attention to (1) the pace of volume recovery in Sterigenics and the sustainability of recent pricing gains, (2) whether Nelson Labs can maintain its margin expansion amid regulatory changes and advisory service headwinds, and (3) the normalization of Nordion's revenue as shipment timing effects subside. Ongoing litigation outcomes and any regulatory developments related to ethylene oxide emissions will also be important markers to watch. Sotera Health Company currently trades at $10.85, down from $11.49 just before the earnings. At this price, is it a buy or sell? See for yourself in our full research report (it's free). Donald Trump's victory in the 2024 U.S. Presidential Election sent major indices to all-time highs, but stocks have retraced as investors debate the health of the economy and the potential impact of tariffs. While this leaves much uncertainty around 2025, a few companies are poised for long-term gains regardless of the political or macroeconomic climate, like our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025). Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today. Sign in to access your portfolio
Yahoo
15-05-2025
- Business
- Yahoo
SHC Q1 Earnings Call: Sotera Health Outperforms Expectations, Highlights Resilient Service Demand
Healthcare services company Sotera Health (NASDAQ:) beat Wall Street's revenue expectations in Q1 CY2025, with sales up 2.6% year on year to $254.5 million. Its non-GAAP profit of $0.14 per share was 14.9% above analysts' consensus estimates. Is now the time to buy SHC? Find out in our full research report (it's free). Revenue: $254.5 million vs analyst estimates of $246.9 million (2.6% year-on-year growth, 3.1% beat) Adjusted EPS: $0.14 vs analyst estimates of $0.12 (14.9% beat) Adjusted EBITDA: $121.8 million vs analyst estimates of $113.6 million (47.9% margin, 7.2% beat) Management reiterated its full-year Adjusted EPS guidance of $0.73 at the midpoint Operating Margin: 22.4%, in line with the same quarter last year Free Cash Flow was $35.6 million, up from -$25.19 million in the same quarter last year Organic Revenue rose 3.5% year on year (12.1% in the same quarter last year) Market Capitalization: $3.64 billion Sotera Health's first quarter results reflected steady demand across its sterilization and lab testing businesses, with management emphasizing improvement in core service volumes and margin expansion. CEO Michael Petras attributed the quarter's performance to higher pricing within Sterigenics, positive volume trends in Nelson Labs, and a one-time revenue shift in Nordion. Petras also pointed to the company's ability to capture share in regulated end markets, such as bioprocessing, as a source of advantage. Looking ahead, management reaffirmed its full-year guidance and stressed confidence in the company's exposure to stable, service-based revenue streams. CFO Jon Lyons highlighted ongoing margin initiatives at Nelson Labs and reiterated that tariffs and foreign exchange are expected to have minimal impact. Petras added, 'We are optimistic based on what we are seeing here, even at the early stages of the second quarter,' citing positive customer feedback and improving order trends in key segments. Management provided insight into the operational levers driving the quarter's performance and offered clarity on segment dynamics, risk factors, and customer trends impacting results. Sterigenics pricing and volume: Revenue growth was primarily driven by higher pricing and gradual volume recovery, with management noting that underlying customer demand is stabilizing and bioprocessing volumes are improving, albeit from a small base. Nordion shipment timing: The segment benefited from early Cobalt-60 shipments originally scheduled for the second quarter, temporarily boosting revenue and margin but not altering the full-year outlook for the business. Nelson Labs margin expansion: Margin improvement at Nelson Labs was supported by increased core lab testing volumes, better mix, and stable labor costs, as well as optimization efforts in response to regulatory-driven demand for testing. Limited tariff exposure: Management stated that current tariff policies are not expected to materially affect Sotera Health, since most revenue is generated from services and Cobalt-60 imports from Canada are exempt under existing trade agreements. Ongoing litigation and regulatory compliance: The company continues to defend itself in ethylene oxide (EO) litigation and is investing in regulatory compliance, particularly with evolving EPA rules. Management is confident in its operational safety but acknowledges ongoing legal costs. Management expects stable demand for sterilization and lab services in 2025, supported by regulated healthcare markets and ongoing operational efficiency initiatives. Service-based revenue resilience: The company's reliance on recurring service revenue, which makes up about 85% of sales, underpins management's confidence in navigating industry and regulatory shifts without significant disruption. Margin improvement focus: Initiatives in lab optimization and cost control, particularly at Nelson Labs, are expected to support ongoing adjusted EBITDA margin expansion throughout the year. Regulatory and legal environment: While management sees minimal risk from current tariffs and stable supply for key products, regulatory changes and litigation in EO remain watch points that could influence long-term profitability. Patrick Donnelly (Citi): Asked about tariff effects and Sterigenics volume recovery; management reiterated minimal tariff impact and noted improving volumes, especially in bioprocessing. Brett Fishbin (KeyBanc): Inquired about Nelson Labs' margin drivers and future trajectory; management pointed to regulatory-driven demand, stable labor, and successful optimization initiatives. Matt Sykes (Goldman Sachs): Sought an update on EO litigation risk and cross-selling efforts; management emphasized ongoing legal defense and described continued progress in cross-selling between Sterigenics and Nelson Labs. Luke Sergott (Barclays): Queried about the impact of shipment timing on Nordion's margins and expectations for Sterigenics' volume trends; management clarified that shipment timing was a temporary factor and volumes are expected to improve. Jason Bednar (Piper Sandler): Asked about Sterigenics pricing stability and customer responses to price increases; management indicated price levels are defensible and ongoing contract negotiations are balancing value delivery with customer cost pressures. In the coming quarters, the StockStory team will monitor (1) sustained volume recovery in Sterigenics, particularly as customer inventory and device utilization trends normalize; (2) Nelson Labs' ability to maintain margin gains through continued optimization and regulatory-driven testing demand; and (3) the progression of EO litigation and any regulatory changes impacting operational costs. The stability of service revenue and execution on cross-segment growth opportunities will also be key markers of Sotera Health's strategic progress. Sotera Health Company currently trades at a forward P/E ratio of 16.8×. Should you load up, cash out, or stay put? Find out in our free research report. The market surged in 2024 and reached record highs after Donald Trump's presidential victory in November, but questions about new economic policies are adding much uncertainty for 2025. While the crowd speculates what might happen next, we're homing in on the companies that can succeed regardless of the political or macroeconomic environment. Put yourself in the driver's seat and build a durable portfolio by checking out our Top 5 Growth Stocks for this month. This is a curated list of our High Quality stocks that have generated a market-beating return of 176% over the last five years. Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
CNBC
05-05-2025
- Business
- CNBC
Goldman Sachs says this little-known health stock can withstand volatile macro environment, rise more than 35%
While investor uncertainty from President Donald Trump's tariffs looms over the market, Sotera Health may not feel the pain, according to Goldman Sachs. The bank upgraded shares of the testing lab company to buy from neutral and raised its price target to $17 from $14. That implies 37.3% upside from Friday's close. "While SHC has always maintained a durable business model with exposure to commercial pharmaceutical and medical devices, which are less volatile in an economic downturn due to the necessary nature of the products, we believe this exposure has become much more attractive to investors in the current environment given increased macro-related uncertainty," analyst Matthew Sykes wrote to clients on Monday. The stock is coming off a more than 1% slide for April after Trump announced his steep "reciprocal" tariffs on goods from other countries, though he later paused many of those levies for 90 days. The market spiraled in the aftermath of that initial announcement, with the S & P 500 once nearing a 20% drop from its recent February high during the month. Sotera Health are down around 5% year to date and more than 15% over the past six months. SHC 6M mountain SHC, 6-month But Sykes thinks the sell-off for the stock and was "unwarranted" because Sotera Health is "uniquely insulated" from Trump's tariffs as a result of its primarily service based model and Cobalt-60 supply business exemptions under the U.S.-Mexico-Canada Agreement. Moreover, the analyst found that the company has meaningful exposure to end markets that will prove to be more durable in the event of a recession, such as medical devices and pharmaceuticals. He noted that the commercial products involved in Sotera Health's Sterigenics business has about 68% revenue exposure to the medical device end market and about 15% revenue exposure to pharmaceuticals. "While we remain more cautious on names in our coverage universe that have exposure to Pharma R & D spend and the US Academic research market given capital conservation efforts and funding concerns could lead to lower volumes in those areas, we believe commercial products in Pharma and Med device are much less likely to see negative impacts from broader economic uncertainty," Sykes also wrote. Wall Street is split on Sotera Health. Among the eight analysts covering it, four have a strong buy or buy rating, while the other four have a neutral view with a hold rating, per LSEG. The stock was nearly 4% higher in morning trading on Monday, bringing its gains over the past week to 14%.
