JPMorgan analyst Casey Woodring double downgraded Sotera Health to Underweight from Overweight with a price target of $9, down from $26, following Monday’s “disappointing verdict” in the company’s first trial alleging improper emissions of carcinogenic ethylene oxide. The analyst believes the court’s decision implicates downside risk for the remaining 700 individual cases yet to be resolved. While the potential impacts of the litigation were largely open-ended heading into the first trial given lack of precedent, Monday’s verdict found Sotera liable for $345M in damages to be paid to the defendant alleging the facility’s emissions caused her cancer, the largest individual payout on record in the state of Illinois, Woodring points out. The analyst believes investors are likely to price in the “unprecedented ruling” as a higher probability of a larger settlement or subsequent payouts of the remaining individual lawsuits.
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