STERIS Plc (STE): Riding the Crest of Procedural Growth—Balancing Headwinds with Recurring Revenue and Margin Expansion !-

STERIS CEO Daniel Carestio emphasized strong procedural volume growth in the U.S., with high single-digit rebounds in the Rust Belt and robust demand across Sun Belt states. Europe lags behind by 6-9 months, but recovery signals are emerging. We believe STERIS is capitalizing on the shift from acute care hospitals to ASCs, driving demand for its sterilization equipment and consumables, further solidifying its leadership in sterile processing and industrial sterilization of single-use devices, positioning the company for sustained market share gains. We also see that while the FY23 capital equipment cycle, buoyed by five quarters of backlogged orders, it is expected that it will normalize, recurring revenue now comprises 80% of total sales, establishing a stable foundation for continued growth. The Applied Sterilization Technologies (AST) segment is gaining traction, particularly in international markets like Malaysia and Costa Rica, where capacity expansions are meeting increasing demand. The Food Equipment segment also saw 9% growth, driven by product launches and steady demand from large grocery retailers. Despite macroeconomic headwinds, STERIS’s operational resilience and focus on high-growth areas like ambulatory services and expanded endoscopy offerings ensure margin expansion and further market penetration. Management remains poised to leverage long-term procedural volume growth and anticipates incremental opportunities as the European market stabilizes. With a diversified portfolio, robust recurring revenue, and disciplined execution, STERIS is well-positioned to navigate market challenges and drive long-term growth. We see the stock.....We delve into Major Drivers, Investment Thesis &followup to our Initiation of Coverage :Earnings Review F1Q25, Forecasts,DCF, Valuation, Peer Analysis, ESG & Risks