Baird lowers Stericycle stock target due to leverage concerns

Friday – Baird revised its outlook on waste management company Stericycle (NASDAQ: ) stock, lowering its price target to $55 from $62 while maintaining a neutral rating.

The company noted that concerns about the company's leverage may have impacted the stock's recent performance. Stericycle management's hints of higher leverage, combined with a tighter margin of error on financial covenants and higher days receivables outstanding (DSO), could add to investor jitters.

Amid these concerns, Stericycle's management announced the launch of a new subscription-based service offering called SID. The development is seen as a positive move with potential benefits for the company.

Despite these changes, Baird has chosen to maintain a neutral position on Stericycle stock in the early stages of the ERP rollout. The company acknowledges that Stericycle presents an attractive long-term improvement opportunity, but prefers to remain cautious until more substantial progress is observed.

Investment Professional Insights

As Stericycle (NASDAQ: SRCL ) launches new SID services and moves through its post-ERP deployment period, investors are paying close attention to the company's financials and market performance. According to real-time data from InvestingPro, Stericycle has a market capitalization of approximately $4.3 billion. Despite a challenging revenue growth outlook, with a change of -3.12% in the trailing 12 months to the first quarter of 2024, the company's gross margin remains strong at 37.79%.

InvestingPro Tips suggests that Stericycle's net profit is expected to grow this year, which could signal a turnaround for the company, which has been unprofitable over the past 12 months. Additionally, the relative strength index (RSI) suggests the stock may be in oversold territory, providing investors with a potential entry point. Analysts predict the company will be profitable this year, a key factor that could influence the stock's direction. It's worth noting, however, that Stericycle currently doesn't pay a dividend to shareholders, which may be a consideration for income-focused investors.

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For those looking to delve deeper into the Stericycle landscape, InvestingPro offers a wealth of additional advice.Use coupon code PRONEWS24readers can receive an additional 10% discount by subscribing to Pro and Pro+ every year or every two years, thereby obtaining more expert analysis and data to inform investment decisions.

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