One under-the-radar company that’s seeing an impressive surge in today’s session is Sotera Health (NASDAQ:SHC). Amid a rally in various Nasdaq stocks today, SHC stock has seen an upward move. However, it’s the voracity of the move (this stock is currently up approximately 20% at the time of writing) that has caught the eye of many investors.
Sotera Health specializes in lab testing, sterilization solutions and advisory services for the healthcare space. With a footprint across North America, Europe and other international markets, Sotera is likely the $5 billion market cap company many investors haven’t heard of.
That said, some headline news appears to have put SHC stock on the radar for many investors. The company announced that it finalized a settlement for an ongoing class action lawsuits tied to ethylene oxide claims against Sterigenics, a subsidiary of Sotera. Sterigenics was accused of “illegally releasing a cancer-causing waste into the air at its Willowbrook facility, which permanently closed in 2019.”
Let’s dive into why this news is causing SHC stock to soar today.
Why Is SHC Stock On the Move Higher Today?
This settlement amounts to more than $400 million. Sotera has agreed to pay to settle nearly all claims against the company. In its press release, Sotera stated that 879 of the 882 claimants who filed the suit have opted into the settlement program. Thus, for all intents and purposes, this case is closed for Sotera.
While the price tag is certainly hefty, and Sotera may need to raise debt or issue shares to cover this cost (given their negative earnings), the fact that this lawsuit is behind the company is something investors clearly are cheering today. Uncertainty is generally discounted to a greater degree than what will actually transpire when it comes to litigation. With certainty on how much Sotera will pay to settle these claims, investors can move forward to project the company’s future earnings and more accurately price the stock.
There are still three ongoing cases, which will see their way through court. Accordingly, we could see additional headline news in the days and weeks to come. But for now, investors are clearly breathing a sigh of relief and moving on. That’s great for the company’s stock price, putting this stock back on the radar of some investors who may have stepped aside until this debacle was resolved.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
