STERIS’ System 1.5 Processing System Gets FDA Clearance

Analysts are Sidoti & Company reiterate their “buy” rating on STERIS Corp (NYSE: STE), while raising their estimates for the company. The price target for STE has been raised from $40 to $46.

The FDA had recommended healthcare facilities to stop using STE’s System 1 Sterile Processing System in December last year. The decision followed reports of malfunctions, resulting in infections. STERIS has now received clearance from the FDA for its System 1.5, which is an updated version of the System 1 that was submitted in February last year.

“We expect a smooth transition for customers and raise our EPS forecasts to reflect the contribution from System 1 (10% of revenue),” the analysts add.

Sidoti & Company has raised its EPS estimates for 2010, 2011 and 2012 from $0.37 to $0.50, from $0.46 to $0.60 and from $0.52 to $0.61, respectively.

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