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Omnicell (OMCL) Up 10% Since Q1 Earnings: What's Driving It?
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Shares of Omnicell, Inc. (OMCL - Free Report) have rallied 10% versus the industry's 4.1% decline since its first-quarter 2022 earnings released on April 28.
The renowned medical device solutions provider has a market capitalization of $5.31 billion. Its earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average beat being 13.4%.
This Zacks Rank #2 (Buy) stock has a VGM Score of D. VGM Score helps identify stocks with the most attractive value, best growth and promising momentum.
The rally was largely driven by the company’s long-term sole source agreements with leading U.S. health systems. The company also continued to benefit from noteworthy developments in the Autonomous Pharmacy. A good solvency position instills investor confidence.
Image Source: Zacks Investment Research
Let’s take a quick look at the important catalysts to understand this positive trend.
Key Growth Drivers
Partnerships to Add Value: Omnicell has been making continued efforts to expand through strategic partnerships. The company currently has long-term sole source agreements with more than 50% of the top 300 U.S. health systems. In the first quarter, a leading health system in the Southeast selected Omnicell Central Pharmacy Dispensing Service to help optimize inventory management and improve safety in its central pharmacy operations. Omnicell extended agreements with a leading health system in Illinois and another leading health system in Southeastern Massachusetts for another five years in the quarter under review.
Autonomous Pharmacy Model Holds Potential: The IVX Station, Omnicell One, EnlivenHealth and other services are expected to help Omnicell realize the industry vision of Autonomous Pharmacy. Recently, the Omnicell One was leveraged by the University Health in San Antonio and an Ohio-based health system partner. The ongoing integration of EnlivenHealth with FDS Amplicare and MarkeTouch Media continued to progress well in the first quarter.
In addition, Omnicell’s latest launch of the IVX Station, available through the IV Compounding Service, is expected to deliver IV compounding at scale and address staff shortages. The IVX Station reduces errors related to manual processes and lowers the high cost of outsourcing.
Strong Solvency: Omnicell exited first-quarter 2022 with cash and cash equivalents of $265 million compared with $349.1 million at the end of 2021. The company did not report any debt on its balance sheet at the end of the quarter, indicating strong solvency. This is good news regarding the company’s solvency position, particularly during the year of economic downturn, when it is majorly facing manufacturing and supply disruptions globally.
Favorable Growth Parameters
For 2022, Omnicell has an expected earnings growth rate of 4.20%, compared to the industry’s projected 4.63% growth. Revenues are expected to grow 23.19% on a year-over-year basis, which compares to the industry’s estimated 17.85% growth.
Omnicell’s return on equity (ROE) stands at an impressive 11.35% versus the industry’s ROE of (23.72%).
The company has a current cash flow growth rate of 52.67% compared with the industry’s growth rate of 35.02%.
Other Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Novo Nordisk (NVO - Free Report) and Masimo Corporation (MASI - Free Report) .
AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 14.9% against the industry’s 44.7% fall.
Novo Nordisk has a long-term earnings growth rate of 14.5%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 7.6%, on average. It currently flaunts a Zacks Rank #2.
Novo Nordisk has outperformed its industry in the past year. NVO has gained 29.3% against the industry’s 16.6% growth.
Masimo has a historical earnings growth rate of 15.1%. Masimo’s earnings surpassed estimates in the trailing four quarters, the average surprise being 4.4%. It currently carries a Zacks Rank #2.
Masimo has underperformed its industry in the past year. MASI has declined 43.5% compared with the industry’s 25.5% plunge.
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Omnicell (OMCL) Up 10% Since Q1 Earnings: What's Driving It?
Shares of Omnicell, Inc. (OMCL - Free Report) have rallied 10% versus the industry's 4.1% decline since its first-quarter 2022 earnings released on April 28.
The renowned medical device solutions provider has a market capitalization of $5.31 billion. Its earnings surpassed estimates in three of the trailing four quarters and missed the same in the other, the average beat being 13.4%.
This Zacks Rank #2 (Buy) stock has a VGM Score of D. VGM Score helps identify stocks with the most attractive value, best growth and promising momentum.
The rally was largely driven by the company’s long-term sole source agreements with leading U.S. health systems. The company also continued to benefit from noteworthy developments in the Autonomous Pharmacy. A good solvency position instills investor confidence.
Image Source: Zacks Investment Research
Let’s take a quick look at the important catalysts to understand this positive trend.
Key Growth Drivers
Partnerships to Add Value: Omnicell has been making continued efforts to expand through strategic partnerships. The company currently has long-term sole source agreements with more than 50% of the top 300 U.S. health systems. In the first quarter, a leading health system in the Southeast selected Omnicell Central Pharmacy Dispensing Service to help optimize inventory management and improve safety in its central pharmacy operations. Omnicell extended agreements with a leading health system in Illinois and another leading health system in Southeastern Massachusetts for another five years in the quarter under review.
Autonomous Pharmacy Model Holds Potential: The IVX Station, Omnicell One, EnlivenHealth and other services are expected to help Omnicell realize the industry vision of Autonomous Pharmacy. Recently, the Omnicell One was leveraged by the University Health in San Antonio and an Ohio-based health system partner. The ongoing integration of EnlivenHealth with FDS Amplicare and MarkeTouch Media continued to progress well in the first quarter.
In addition, Omnicell’s latest launch of the IVX Station, available through the IV Compounding Service, is expected to deliver IV compounding at scale and address staff shortages. The IVX Station reduces errors related to manual processes and lowers the high cost of outsourcing.
Strong Solvency: Omnicell exited first-quarter 2022 with cash and cash equivalents of $265 million compared with $349.1 million at the end of 2021. The company did not report any debt on its balance sheet at the end of the quarter, indicating strong solvency. This is good news regarding the company’s solvency position, particularly during the year of economic downturn, when it is majorly facing manufacturing and supply disruptions globally.
Favorable Growth Parameters
For 2022, Omnicell has an expected earnings growth rate of 4.20%, compared to the industry’s projected 4.63% growth. Revenues are expected to grow 23.19% on a year-over-year basis, which compares to the industry’s estimated 17.85% growth.
Omnicell’s return on equity (ROE) stands at an impressive 11.35% versus the industry’s ROE of (23.72%).
The company has a current cash flow growth rate of 52.67% compared with the industry’s growth rate of 35.02%.
Other Key Picks
A few better-ranked stocks in the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Novo Nordisk (NVO - Free Report) and Masimo Corporation (MASI - Free Report) .
AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has outperformed its industry in the past year. AMN has gained 14.9% against the industry’s 44.7% fall.
Novo Nordisk has a long-term earnings growth rate of 14.5%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 7.6%, on average. It currently flaunts a Zacks Rank #2.
Novo Nordisk has outperformed its industry in the past year. NVO has gained 29.3% against the industry’s 16.6% growth.
Masimo has a historical earnings growth rate of 15.1%. Masimo’s earnings surpassed estimates in the trailing four quarters, the average surprise being 4.4%. It currently carries a Zacks Rank #2.
Masimo has underperformed its industry in the past year. MASI has declined 43.5% compared with the industry’s 25.5% plunge.