Needham Downgrades This Medical Equipment Stock Due To Lawsuit Risk
A Cook County jury awarded $363 million to a woman who developed breast cancer after living close to a medical device sterilization facility run by Sterigenics, a unit of Sotera Health Co (NASDAQ: SHC).
The lawsuit was related to ethylene oxide (EO) exposure, a disinfectant used to sterilize medical devices.
The trial was the first of many to come against the Willowbrook plant operators, with more than 760 lawsuits against it in Cook County Circuit Court for toxic emissions.
Needham expects concerns about Steris Plc's (NYSE: STE) potential EO liabilities to continue to weigh on its shares. The analyst downgraded the company's stock from Buy to Hold.
Steris is a medical equipment company specializing in sterilization and surgical products for the U.S. healthcare system.
Needham writes that while SHC is facing more than 1,000 EO lawsuits, STE only has a few. But the successful SHC lawsuit could lead to increased EO lawsuits.
STE's filings do not reveal the same degree of lawsuits as SHC. According to STE, while some lawsuits have been filed against an STE affiliate regarding a sterilization facility in Waukegan, IL, STE has not owned or operated that facility for years.
Price Action: SHC shares are down 1.96% at $7.27, and STE shares are down 5.04% at $167.84 on the last check Friday.
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