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Sotera Health (NASDAQ:SHC) received a double upgrade to overweight at Barclays after its Sterigenics unit agreed to settle the more than 870 ethylene oxide cases against it in Illinois. The upgrade followed the shares doubling on Tuesday after news of the settlement. SHC gained 1.2% in after hours trading.
Sotera (SHC) was raised to overweigh from underweight and its price target was upped to $22 from $6, Barclays analyst Luke Sergott wrote in a note on Tuesday, with the title “Can See Clearly Now the Overhang is Gone.”
Sterigenics will pay $408 million to settle the Illinois claims. Sterigenics and Sotera Health (SHC) denidc any liability and the agreements explicitly provide that the settlements are not to be construed as an admission of any liability or that emissions from the Willowbrook facilities.
Following the Willowbrook settlement, there will likely be a similar outcome for Sterigenics litigation in Atlanta, according to Barclay’s Sergott. The liability for Atlanta may be somewhere between $15 million-$30Million or $50K-$100K/case based on the 300 outstanding cases. He also noted that punitive damages are capped at $200K in Georgia.
There is also separate litigation in New Mexico, which was brought by the state’s attorney general, though Sergott doesn’t see the same overhang as the Illinois and Atlanta cases.
The Illinois settlement comes after Sotera Heath (SHC) shares plunged 33% on Sept. 19 after an Illinois jury awarded $360 million to a plaintiff in a lawsuit against its Sterigenics unit.
