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Omnicell's Aesynt Buyout Looks Promising amid Several Woes
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On Apr 6, we issued an updated research report on Mountain View, CA-based Omnicell Inc. (OMCL - Free Report) . The company develops and markets end-to-end automation solutions for the medication-use process.
Over the last three months, Omnicell’s shares traded above the Zacks categorized Medical Info Systems industry. The stock increased 20.36% compared with the 14.19% gain of the broader industry.
While Omnicell’s shares outperformed the broader market over the last three months, a comparative analysis of the company’s forward P/E (F12M basis) multiple reflects a relatively gloomy picture that might be a cause for investors’ concern. The multiple currently stands at 63.71, a bit stretched when compared with the broader industry’s P/E (F12M basis) multiple of 46.14. Moreover, even when compared to the market at large, the comparison is unfavorable, as the current P/E (F12M basis) for the S&P 500 is at 17.78. We believe the company’s recent developments including the Ateb acquisition, tie-ups and substantial expansion in the non-acute care space will keep the valuation stretched for some time.
Omnicell adopted several strategies to drive its top line, including portfolio expansion, acquisitions and further penetration in the medication adherence market. Thus, the company continues to battle escalating costs. During the fourth quarter, it witnessed a 40.3% surge in operating expenses. Thus, the company’s margin got affected as well.
On a positive note, with the growing significance of medication non-adherence, Omnicell is making substantial expansion in the non-acute care space. The company is also progressing well with its three-pronged growth strategy. We remain encouraged by the Aesynt acquisition that expanded Omnicell’s share in the medication automation and analytics market. The fourth quarter was a robust one for Aesynt products. Post the takeover, management’s confidence about delivering significant revenue and earnings growth over the coming years, bolsters our confidence in the stock.
On the flip side, we are particularly concerned about the company’s increasing cost of production and integration expenses. The escalating costs continue to dent its margin performance. Weak hospital spending trends and tough competition also pose threats.
Quidel Corporation gained 27.90% in the last one year compared with the S&P 500’s gain of 14.68%. The company reported a stellar four-quarter positive average earnings surprise of 85.97%.
Hologic surged 20.43% in the last one year compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive 4.16%.
Inogen gained 64.23% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 49.08%.
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Omnicell's Aesynt Buyout Looks Promising amid Several Woes
On Apr 6, we issued an updated research report on Mountain View, CA-based Omnicell Inc. (OMCL - Free Report) . The company develops and markets end-to-end automation solutions for the medication-use process.
Over the last three months, Omnicell’s shares traded above the Zacks categorized Medical Info Systems industry. The stock increased 20.36% compared with the 14.19% gain of the broader industry.
While Omnicell’s shares outperformed the broader market over the last three months, a comparative analysis of the company’s forward P/E (F12M basis) multiple reflects a relatively gloomy picture that might be a cause for investors’ concern. The multiple currently stands at 63.71, a bit stretched when compared with the broader industry’s P/E (F12M basis) multiple of 46.14. Moreover, even when compared to the market at large, the comparison is unfavorable, as the current P/E (F12M basis) for the S&P 500 is at 17.78. We believe the company’s recent developments including the Ateb acquisition, tie-ups and substantial expansion in the non-acute care space will keep the valuation stretched for some time.
Omnicell adopted several strategies to drive its top line, including portfolio expansion, acquisitions and further penetration in the medication adherence market. Thus, the company continues to battle escalating costs. During the fourth quarter, it witnessed a 40.3% surge in operating expenses. Thus, the company’s margin got affected as well.
On a positive note, with the growing significance of medication non-adherence, Omnicell is making substantial expansion in the non-acute care space. The company is also progressing well with its three-pronged growth strategy. We remain encouraged by the Aesynt acquisition that expanded Omnicell’s share in the medication automation and analytics market. The fourth quarter was a robust one for Aesynt products. Post the takeover, management’s confidence about delivering significant revenue and earnings growth over the coming years, bolsters our confidence in the stock.
On the flip side, we are particularly concerned about the company’s increasing cost of production and integration expenses. The escalating costs continue to dent its margin performance. Weak hospital spending trends and tough competition also pose threats.
Zacks Rank & Key Picks
Omnicell currently has a Zacks Rank #3 (Hold).Some better-ranked stocks within the broader Medical sector include Quidel Corporation (QDEL - Free Report) , Hologic, Inc. (HOLX - Free Report) , and Inogen, Inc. (INGN - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Quidel Corporation gained 27.90% in the last one year compared with the S&P 500’s gain of 14.68%. The company reported a stellar four-quarter positive average earnings surprise of 85.97%.
Hologic surged 20.43% in the last one year compared with the S&P 500’s gain. Its four-quarter average earnings surprise was a positive 4.16%.
Inogen gained 64.23% in the past one year, better than the S&P 500 mark. It posted a trailing four-quarter positive average earnings surprise of 49.08%.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Click here for Zacks' private trades >>