Stericycle, Inc.
Thesis
Stericycle is overvalued due to declining EBITDA, margin erosion from shrinking end markets, and value-destructive acquisitions that have strained its balance sheet. The company faces significant risks including potential asset impairments and ongoing scrutiny from the SEC regarding its accounting practices. With a target price of $38, there is an expected downside of approximately 40% over the next 18 months.
Did it work?
The short thesis called for roughly 40% downside to $38 over 18 months, but the stock instead appreciated +92.8% over the 100 months since the pitch — a decisive move in the opposite direction. While some thesis elements (SEC scrutiny, accounting concerns) did materialize, the core price prediction was invalidated, and the company was ultimately taken over at a premium. With the stated horizon long elapsed and a large adverse return, the thesis clearly failed.