01:18 PM EST, 11/04/2024 (MT Newswires) -- Sotera Health's ( SHC ) Q3 results are expected to align with projections, driven by consistent volume growth in its Sterigenics and Nelson Labs segments, RBC Capital Markets said in an earnings preview emailed Monday.

The firm said the results are driven by better capacity use in Sterigenics, improved cost alignment for Nordion's operations, and a favorable shift in Nelson Labs toward higher-margin testing services.

"We expect volume progress will be enough for shares to continue to grind higher toward our $17 price target," the firm added.

Key contributors to a positive H2 outlook include a stable inventory environment, ongoing growth in MedTech revenue, and continued high healthcare utilization, according to RBC.

RBC anticipates Sotera Health's ( SHC ) management to reaffirm the fiscal year guidance. The company has kept its current year targets for revenue and earnings before interest, taxes, depreciation, and amortization growth at 4-6%, contingent upon an increase in sales volumes.

The early momentum, excluding Nordion, shows revenue growth in H1 reaching the upper limit of the target range at 5.6%. This performance suggests it may alleviate some pressure on the company's plan for a gradual increase in sales volumes in H2, according to the note.

RBC's expectations for Sotera Health's ( SHC ) Q3 results indicate a revenue of $279 million, matching the consensus forecast. Additionally, the firm projects earnings per share of $0.18, also in line with the consensus estimate.

The firm said it does not anticipate any substantial updates on Sotera Health's ( SHC ) legal proceedings in California or Georgia, where the cases involve allegations regarding the health effects of ethylene oxide emissions.

RBC has a outperform rating on Sotera Health's ( SHC ) stock, with a $17 price target.

Price: 15.87, Change: +0.01, Percent Change: +0.06