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Cantel Medical Corp CMD

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Steris Acquires Cantel for $3.6 Billion; Narrow-Moat Firms' Combination Creates Clear Market Leader

Aaron Degagne Equity Analyst

Analyst Note

| Aaron Degagne |

Narrow-moat Cantel Medical agreed to be acquired by narrow-moat Steris on Tuesday, Jan. 12, creating a titan in the U.S. sterilization market. Steris will be acquiring Cantel in a $3.6 billion cash and stock transaction, including debt, and the deal is expected to close by the end of June. We think this is a good agreement for both Cantel and Steris, with Cantel shareholders getting a deal worth about $85 per share, a premium of 30% over our $65 fair value estimate, while the Cantel acquisition should help Steris cement its position as a leader in the U.S. infection control and prevention market. We are leaving our $175 fair value estimate on Steirs intact and raising our fair value estimate on Cantel to $85 per share, in line with the purchase price.

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Company Profile

Business Description

Cantel Medical is a New Jersey-based manufacturer of hospital supplies for infection prevention, which include products used in endoscope disinfection, water purification systems for use in dialysis treatment, and dental supplies. The firm reports in four segments: medical (46% of fiscal 2020 sales), dental (32%), life sciences (19%), and dialysis (3%). Geographic exposure is primarily in the U.S., which accounts for about 75% of revenue, with international markets making up the remaining 25%.

150 Clove Road, 9th Floor
Little Falls, NJ, 07424
T +1 973 890-7220
Sector Healthcare
Industry Medical Instruments & Supplies
Most Recent Earnings Oct 31, 2020
Fiscal Year End Jul 31, 2021
Stock Type Speculative Growth
Employees 3,669