Stericycle, Inc.
Thesis
We recommend a short on Stericycle (SRCL) with a price target of $38, presenting nearly 40% downside from today’s price of $61. We believe that unprecedented competition, a high fixed-cost structure, and a stretched balance sheet will drive declines through 2020. Accounting red flags and poor management bolster our thesis.
Did it work?
The stock price of Stericycle (SRCL) has increased by 53.3% since the short pitch, moving from $61 to a significantly higher price. The thesis anticipated a decline due to competition, high fixed costs, and management issues, none of which have materialized in a way that negatively impacted the stock's performance. Given the substantial price increase and the failure of the thesis to predict this outcome, the recommendation to short the stock has clearly failed.
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