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Here's Why You Should Keep Omnicell (OMCL) in Your Portfolio
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Omnicell, Inc. (OMCL - Free Report) has been gaining investor confidence on consistently positive results. Over the past year, the stock has rallied 14.2%.
This Mountain View, CA-based developer and marketer of end-to-end automation solutions for the medication-use process has a market cap of $1.90 billion. The company’s five-year projected growth rate is favorable at 15.8%, compared with 15.9% of the broader industry.
However, the estimate revision trend for this Zacks Rank #3 (Hold) company for the current year has been mixed. In the last 60 days, three analysts revised their estimates upward, with two movements in the opposite direction. However, the estimate revision for earnings increased around 1.5% to $1.99 per share over the same time frame.
Factors at Play
We note that, the stock is progressing well with its 3-legged strategy that covers market expansion through delivery of differentiated, innovative solutions; expansion into new markets, primarily outside the United States; and expansion through strategic partnerships and acquisition of new technologies.
During the last-reported quarter, the company gained some new prominent customers as well as significant strategic deals with existing customers and thereby, progressed in the first leg of its strategy.
Apart from XT Series momentum, the company is witnessing market momentum valuing and validating the entire Omnicell platform as a strategic solution. Omnicell XR2 Automated Central Pharmacy System, which is likely to be available from mid-2018, is already gaining significant momentum in the market with a number of contractual bookings in fourth-quarter 2017.
The second leg of expanding into new markets is driving growth in the Non-Acute Care segment. While the company continues to focus on the Middle East and South Africa, it also sees greater adoption of technologies in other parts of the world, the latest one being Australia. Internationally, the company had signed a contract with HCL HCA healthcare for both pharmacy and supply solutions for six hospitals in the U.K.
The third leg of acquisition and partnerships is also progressing successfully. The company's most recent buyout is InPharmics, a Mississippi-based technology and services company which should help Omnicell in expanding the capabilities of its Performance Center.
Omnicell’s strong position in Sweden, Germany, U.K., Singapore, Middle East, South Africa and China also buoys optimism. The company has been witnessing strong pipeline development in these countries. In addition, Omnicell witnessed strong business trends across Europe where it has observed a healthy acceptance of its medication adherence products.
Meanwhile, we would like to remain on the sidelines as over the past month, Omnicell has been underperforming the broader industry. The stock has declined 16.1% versus the industry’s 6.5% fall. Moreover, Omnicell continues to expect higher costs in the upcoming quarters stemming from the integration of Aesynt and Ateb and expenses related to the recently launched XT series, thereby adding to the concern.
Moreover, Omnicell is exposed to a resilient hospital capital expenditure environment that might adversely affect the adoption of its solutions. Furthermore, the reimbursement mix has also affected the endowments income, further affecting hospital spending capabilities. While the company has won some new deals in larger hospitals, the market is still susceptible to the economy and credit conditions.
Key Picks
A few better-ranked stocks in the broader medical sector are PerkinElmer , Bio-Rad Laboratories (BIO - Free Report) and Becton, Dickinson and Company (BDX - Free Report) .
PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.
Becton, Dickinson and Company has a Zacks Rank #2. The company has a long-term expected earnings growth rate of 13.3%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Image: Bigstock
Here's Why You Should Keep Omnicell (OMCL) in Your Portfolio
Omnicell, Inc. (OMCL - Free Report) has been gaining investor confidence on consistently positive results. Over the past year, the stock has rallied 14.2%.
This Mountain View, CA-based developer and marketer of end-to-end automation solutions for the medication-use process has a market cap of $1.90 billion. The company’s five-year projected growth rate is favorable at 15.8%, compared with 15.9% of the broader industry.
However, the estimate revision trend for this Zacks Rank #3 (Hold) company for the current year has been mixed. In the last 60 days, three analysts revised their estimates upward, with two movements in the opposite direction. However, the estimate revision for earnings increased around 1.5% to $1.99 per share over the same time frame.
Factors at Play
We note that, the stock is progressing well with its 3-legged strategy that covers market expansion through delivery of differentiated, innovative solutions; expansion into new markets, primarily outside the United States; and expansion through strategic partnerships and acquisition of new technologies.
During the last-reported quarter, the company gained some new prominent customers as well as significant strategic deals with existing customers and thereby, progressed in the first leg of its strategy.
Apart from XT Series momentum, the company is witnessing market momentum valuing and validating the entire Omnicell platform as a strategic solution. Omnicell XR2 Automated Central Pharmacy System, which is likely to be available from mid-2018, is already gaining significant momentum in the market with a number of contractual bookings in fourth-quarter 2017.
The second leg of expanding into new markets is driving growth in the Non-Acute Care segment. While the company continues to focus on the Middle East and South Africa, it also sees greater adoption of technologies in other parts of the world, the latest one being Australia. Internationally, the company had signed a contract with HCL HCA healthcare for both pharmacy and supply solutions for six hospitals in the U.K.
The third leg of acquisition and partnerships is also progressing successfully. The company's most recent buyout is InPharmics, a Mississippi-based technology and services company which should help Omnicell in expanding the capabilities of its Performance Center.
Omnicell’s strong position in Sweden, Germany, U.K., Singapore, Middle East, South Africa and China also buoys optimism. The company has been witnessing strong pipeline development in these countries. In addition, Omnicell witnessed strong business trends across Europe where it has observed a healthy acceptance of its medication adherence products.
Meanwhile, we would like to remain on the sidelines as over the past month, Omnicell has been underperforming the broader industry. The stock has declined 16.1% versus the industry’s 6.5% fall. Moreover, Omnicell continues to expect higher costs in the upcoming quarters stemming from the integration of Aesynt and Ateb and expenses related to the recently launched XT series, thereby adding to the concern.
Moreover, Omnicell is exposed to a resilient hospital capital expenditure environment that might adversely affect the adoption of its solutions. Furthermore, the reimbursement mix has also affected the endowments income, further affecting hospital spending capabilities. While the company has won some new deals in larger hospitals, the market is still susceptible to the economy and credit conditions.
Key Picks
A few better-ranked stocks in the broader medical sector are PerkinElmer , Bio-Rad Laboratories (BIO - Free Report) and Becton, Dickinson and Company (BDX - Free Report) .
Bio-Rad Laboratories has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here. The company has a long-term expected earnings growth rate of 25%.
PerkinElmer has a long-term expected earnings growth rate of 12.3%. The stock carries a Zacks Rank #2.
Becton, Dickinson and Company has a Zacks Rank #2. The company has a long-term expected earnings growth rate of 13.3%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.
Click here for the 6 trades >>