What happened
A massive dark cloud hanging heavy over Sotera Health (SHC 0.32%) was lifted on Tuesday. After the company announced it had settled a clutch of lawsuits arising from alleged malfeasance by a subsidiary, relieved investors pushed its stock well higher across the subsequent trading days. All told, the stock more than doubled with a weekly gain of over 115%, according to data compiled by S&P Global Market Intelligence.
So what
The accusations against that subsidiary, Sterigenics, stated that the Sotera unit was responsible for producing ethylene oxide emissions that seriously damaged the health of residents near its Illinois plant.
The many plaintiffs bringing the lawsuits and Sotera got at least something of what they wanted in a settlement that was announced Tuesday. The specialty healthcare company will pay out a total of $408 million to nearly all of the plaintiffs, and in return it will not admit to any liability.
It will also not be obligated to admit that the emissions posed a health threat in the immediate area.
Although no one really wins in a tragic situation like this, a settlement gives accusers and the accused some satisfaction.
Now what
Two analysts certainly took this into account when adjusting their takes on Sotera following the settlement news. Immediately afterward, Barclays prognosticator Luke Sergott upgraded his recommendation two pegs from underweight (sell) to overweight (buy). He also dramatically raised his price target, to $22 per share from $6.
A similar move was made by Wolfe Research's Mike Polark, who lifted his recommendation from peer perform (hold) to outperform (buy), placing his Sotera price target at $25.
