Steris is a high quality sterilisation business, with ~6.5% sustainable organic growth due to pricing power and volume growth. Regarding business positioning, there is little not to like.

We would argue that Steris has all the markings of compounder, and has got to the point where the balance sheet has delevered and synergies have run out, therefore a deal or share buy backs should be on the cards.

Ethylene Oxide is causing a lot of concern, however we are unconcerned by the EPA's focus as we do not see Ethylene Oxide as a risk for Steris. Unfortunately, as for many other defensives, we find the risk reward balanced.

Potential Upside: $174(+16%)

Sensible Downside: $122(-20%)

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