Reasons to Retain STE Stock in Your Portfolio Now

STERIS plc’s STE growth in the fiscal second quarter of 2025 can be attributed to the robust performance of its Healthcare business. The company also benefits from the strong rebound prospects for its Applied Sterilization Technologies (“AST”) segment.

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Meanwhile, headwinds such as foreign currency risks and fierce competitive pressure are concerning.

Year to date, shares of this Zacks Rank #3 (Hold) company have lost 2.1% against the industry’s 7.6% growth and the S&P 500’s 18.4% increase.

The renowned provider of infection prevention and other procedural products and services has a market capitalization of $21.15 billion. STE’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 1.18%.

Promising Healthcare Business: The Healthcare segment is gaining from the successful market adoption of its comprehensive offerings, including infection prevention consumables and capital equipment. Further, its services to maintain that equipment, repair reusable procedural instruments and outsource instrument reprocessing services are gaining traction.

For the fiscal second quarter, Healthcare reported revenue growth of 9% year over year. This outperformance indicates a 12% improvement in consumable revenues and 14% growth in service revenues, driven by procedure volumes in the United States as well as price and market share gains. Healthcare achieved 7% constant currency organic revenue growth for the quarter. The success can be attributed to the actions of its operation team to reduce lead times and return backlog to normal levels.

Strong Rebound Prospects in the AST Segment: This technology-neutral contract sterilization service successfully offers a wide range of sterilization modalities through a worldwide network of more than 50 contract sterilization and laboratory facilities. In the fiscal second quarter, the AST division experienced 9% reported growth year over year. This performance was driven by a 6% increase in service revenues and a significant improvement in capital equipment revenues.

Constant currency organic revenues in the fiscal second quarter were in the high single digits. STERIS experienced its first signs of increased bioprocessing demand. Meanwhile, global MedTech customers were stable.

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Foreign Currency Risks: With nearly 30% of the company’s revenues and cost of revenues being generated outside the United States, foreign currency exchange rate fluctuations can significantly affect its financial position, results of operations and competitive position. In the fiscal second quarter, revenues were negatively impacted by currency fluctuations of nearly $2.1 million.

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