Stericycle’s Pricing and Operational Improvements Materialize Into a Strong Third Quarter

Stericycle’s stock rallied over 6% on Nov. 3 after the narrow-moat-rated firm posted strong third-quarter results. Revenue of $690 million and adjusted EPS of $0.65 outpaced FactSet consensus by 2% and 12%, respectively. Management raised its full-year organic revenue guidance to 5%-7% (4%-6% previously) while reaffirming its adjusted EPS ($2.00-$2.15) and free cash flow ($80 million-$100 million) targets. Strong pricing gains and continued operational efficiencies were apparent during the quarter. We believe Stericycle’s operational initiatives are materializing into improved financial performance, and we remain encouraged by the firm’s progress. We raised our fair value estimate 3% to $61 primarily due to the time value of money as our long-term outlook remains intact.