STERIS Soared 6.55%—Can This Momentum Sustain the Surge?

Summary
• STE’s Q1 2026 earnings beat by 15% and revenue growth of 9%
• Dividend hiked 10% to $0.63/share, signaling confidence in cash flow
• Intraday price surged from $226.58 to $237.56, a 6.55% rally

STERIS (STE) is surging on a rare trifecta: a 15% EPS beat, 9% revenue growth, and a dividend hike. The stock’s 6.55% intraday jump reflects investor optimism about the medical device giant’s resilience amid tariffs and regulatory shifts. With a 52-week high of $252.79 in sight, the question is whether this momentum can outlast sector headwinds.

Q1 Earnings Beat and Guidance Hike Fuel STE's Surge
STERIS’s 6.55% rally stems from a Q1 2026 earnings report that exceeded expectations on both the top and bottom lines. Adjusted EPS of $2.34 (up 15% YoY) and revenue of $1.39B (up 9%) outperformed forecasts, driven by 13% growth in healthcare services and 12% in AST. The company raised full-year revenue guidance to 8-9% and increased its dividend by 10%, signaling confidence in cash flow. Management highlighted strong backlog growth in Life Sciences and favorable currency tailwinds, offsetting tariff pressures. This combination of operational strength and strategic clarity ignited a short-term buying frenzy.

Medical Devices Sector Rally as STE Outpaces Peers
The medical devices sector (MDT: +2.25%) is rallying on broader healthcare demand, but STE’s 6.55% surge outpaces peers like Edwards Lifesciences (-1.42%) and Haemonetics (-26.13%). STE’s focus on sterilization and capital equipment positions it to benefit from hospital modernization trends, while its Life Sciences segment capitalizes on biopharma’s shift to aseptic manufacturing. Unlike competitors facing regulatory delays, STE’s recent FDA 510(k) clearances for competitors like Pearl Diagnostics suggest a favorable regulatory environment for innovation-driven players.

Options Playbook: Leveraged Calls and Gamma-Driven Bets
• 200-day average: 224.36 (below current price)
• RSI: 44.43 (neutral)
• MACD: -2.50 (bearish divergence)
• Bollinger Bands: 221.53–231.65 (price near upper band)

STE’s technicals suggest a short-term bullish setup with key support at $226.58 (intraday low) and resistance at $237.56 (intraday high). A 5% upside scenario to $247.47 would test the 52-week high. The STE20250815C230 call (strike $230, expiry 8/15) offers 37.44% leverage and a 75% price change ratio, ideal for a 5-day rally. The STE20250815C240 call (strike $240, expiry 8/15) has 180% leverage and 20% price change potential, capitalizing on high gamma (0.0485) and implied volatility (19.24%).

STE20250815C230:
• Code: STE20250815C230
• Type: Call
• Strike: $230
• Expiry: 2025-08-15
• IV: 13.59% (moderate)
• Leverage: 37.44% (high)
• Delta: 0.8895 (deep in-the-money)
• Theta: -0.7675 (rapid time decay)
• Gamma: 0.0374 (moderate sensitivity)
• Turnover: 3,830 (liquid)
• Payoff at $247.47: $17.47/share (36.6% return).
STE20250815C240:
• Code: STE20250815C240
• Type: Call
• Strike: $240
• Expiry: 2025-08-15
• IV: 19.24% (high)
• Leverage: 180.04% (extreme)
• Delta: 0.2958 (moderate)
• Theta: -0.3781 (moderate decay)
• Gamma: 0.0485 (high sensitivity)
• Turnover: 1,742 (liquid)
• Payoff at $247.47: $7.47/share (37.4% return).

Aggressive bulls should prioritize STE20250815C240 for its gamma-driven response to price swings. If $237.56 holds, STE20250815C230 offers a safer, leveraged play. Both contracts benefit from STE’s elevated turnover and short-term volatility.

Backtest STERIS Stock Performance
The strategy of buying the SPDR S&P 500 ETF (STE) after an intraday surge of 7% has shown favorable performance in backtested data. The 3-day win rate is 53.20%, the 10-day win rate is 49.92%, and the 30-day win rate is 58.13%, indicating a higher probability of positive returns in the short term. The maximum return during the backtest period was 1.68%, which occurred on day 59, suggesting that there is potential for gains but with varying degrees of success across different time frames.

Bullish Momentum Unlikely to Fade—Act Now
STERIS’s 6.55% surge is underpinned by earnings strength, a robust backlog, and a favorable regulatory backdrop. While the RSI (44.43) and MACD (-2.50) hint at short-term consolidation, the stock’s 52-week high of $252.79 remains within reach. Investors should watch the $237.56 intraday high as a key pivot—break above it, and the STE20250815C240 call becomes a high-gamma catalyst. Meanwhile, the sector leader Medtronic (MDT) is up 2.25%, reinforcing the case for STE’s momentum. For those seeking leverage, the STE20250815C240 offers a 180% leveraged bet on a 5% price move. Don’t wait—position now before the 8/15 expiry tightens liquidity.