Sotera Health (SHC) has received a new Buy rating, initiated by BMO Capital analyst, .
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BMO Capital has given its Buy rating due to a combination of factors that suggest a positive outlook for Sotera Health’s financial performance. The dissipation of macroeconomic and industry-specific challenges that have hindered growth over the past few years is expected to pave the way for a resurgence in revenue and EBITDA growth, aligning with management’s targets of 5–7% and 5–8%, respectively. This anticipated growth is supported by improvements in free cash flow and a more favorable market environment.
BMO Capital’s confidence is further bolstered by Sotera Health’s strong pricing power, the potential for market share gains due to new industry regulations, and successful cross-selling strategies. Additionally, the company’s disciplined cost management and capital allocation strategies enhance its financial stability. While ongoing litigation poses a risk, BMO Capital believes this is already reflected in the current stock valuation, which trades at a discount compared to peers, providing potential upside as growth recovers.
In another report released on November 5, Barclays also maintained a Buy rating on the stock with a $20.00 price target.