Stericycle Earnings: We Think Stericycle Has Reached an Inflection Point for Profit Margins

Narrow-moat-rated Stericycle’s stock surged over 10% intraday on Feb. 28 after the firm reported solid fourth-quarter results and issued strong 2024 guidance. We believe the market is becoming more confident in Stericycle’s turnaround story. We had believed 2024 would be an inflection point for Stericycle, as management’s many efforts to improve the firm’s operations would finally begin to bear fruit and result in noteworthy margin expansion. And, indeed, management sees adjusted EBITDA growth of approximately 14% in 2024 on 3%-5% organic revenue growth, approximately in line with our previous expectations. After making modest tweaks to our five-year financial outlook, we’ve raised our fair value estimate for Stericycle to $60 per share, from $59 previously.