Omnicell, Inc. ( OMCL Quick Quote OMCL - Free Report) is gaining from robust demand for its medication management and adherence automation solutions. Omnicell is well on track to achieve its 2025 targets, driven by several factors that raise optimism. However, escalating costs and stiff competition raise concerns.
Over the past year, the Zacks Rank #2 (Buy) stock has gained 51.4% compared with a 38.7% fall of the
industry and a 29.6% rise of the S&P 500.
The renowned medical device solutions provider has a market capitalization of $7.93 billion. Its third-quarter 2021 earnings beat the Zacks Consensus Estimate by 18.7%.
Let’s delve deeper.
Key Growth Catalysts Autonomous Pharmacy Model Holds Potential: As a major milestone in this niche, Omnicell recently introduced fully Autonomous Pharmacy, Omnicell One, available from August. Leveraging on cloud-based data and predictive prescriptive analytics, Omnicell One provides real-time visibility with actionable insights and workflow optimization recommendations that will help improve clinical, financial and operational outcomes across the pharmacy supply chain. As a result of COVID-19, many Omnicell customers have prioritized supply-chain optimization in order to provide critical care to patients. Omnicell One represents a significant step toward leveraging analytics that enables these customers to meet demand efficiently. 2025 Roadmap Looks Impressive: In terms of its 2025 financial roadmap, Omnicell aims to reach $1.90 billion to $2.00 billion of revenues by 2025 -- a 14% to 15% compounded total annual revenues growth rate from 2021 to 2025. Over the same period, it targets an expansion of non-GAAP EBITDA margin from 21% in 2021 to 25% by 2025, representing expansion of approximately 400 basis points. According to the company, its strong market position, growing customer base and strategic focus on innovation will help it achieve these goals. Image Source: Zacks Investment Research Planned Geographic Expansion Another Upside: Outside the United States, healthcare providers are becoming increasingly aware of the benefits of automation. Additionally, there is substantial demand for adherence packaging equipment outside the domestic market. Many government and private entities are aware of the progress made over the last several years in the United States and are investing significantly in information technology and automation. Because the international market is less than 1% penetrated, with very few hospitals adopting medication control systems, Omnicell has specified its second leg of strategies of expanding into new markets. Downsides Escalating Costs and Expenses: Omnicell has 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. Competitive Landscape: Omnicell faces intense competition in the medication management and supply-chain solutions market. Major direct competitors in the medication packaging solutions market like Drug Package, Inc., AutoMed Technologies, Inc. (a subsidiary of ARxIUM), among others, pose a threat as they spearhead several expansion programs. Estimate Trends
Omnicell has been witnessing a positive estimate revision trend for 2022. Over the past 90 days, the Zacks Consensus Estimate for its earnings has moved north by 2.7% to $3.81.
The Zacks Consensus Estimate for its fourth-quarter 2021 revenues is pegged at $310.1 million, suggesting a 24.4% rise from the year-ago reported number.
A few other similar-ranked stocks in the broader medical space include
Thermo Fisher Scientific Inc. ( TMO Quick Quote TMO - Free Report) , McKesson Corporation ( MCK Quick Quote MCK - Free Report) and Laboratory Corporation of America Holdings ( LH Quick Quote LH - Free Report) or LabCorp.
Thermo Fisher surpassed earnings estimates in each of the trailing four quarters, the average surprise being 9.02%. The company currently carries a Zacks Rank of 2. You can see
the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Thermo Fisher’s long-term earnings growth rate is estimated at 14%. TMO’s earnings yield of 3.7% compares favorably with the industry’s (3.6%).
McKesson beat earnings estimates in each of the trailing four quarters, the average surprise being 19.9%. The company currently carries a Zacks Rank #2.
McKesson’s long-term earnings growth rate is estimated at 8.9%. MCK’s earnings yield of 9.9% compares favorably with the industry’s 3.2%.
LabCorp, carrying a Zacks Rank #2, has an estimated long-term growth rate of 10.6%. LH’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.73%.
LabCorp has gained 45.5% compared with the industry’s 16.9% rise over the past year.