We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why Investors Should Retain Omnicell (OMCL) Stock Now
Read MoreHide Full Article
Omnicell, Inc. (OMCL - Free Report) is well poised for growth in coming quarters owing to strong execution of strategies, disciplined cost management and revenue timing. An increase in Omnicell’s service revenues emphasizes its digital transformation strategy. However, stiff competition and mounting operating expenses raise apprehension.
In the past year, the Zacks Rank #3 (Hold) stock has plunged 33.6% compared with a 23.7% fall of the industry and a 6.3% drop of the S&P 500.
The renowned medical device solutions provider has a market capitalization of $3.26 billion. Its first-quarter 2023 earnings beat the Zacks Consensus Estimate by 457.1%. The long-term expected growth rate is estimated at 13.7% compared with the industry’s projection of 16.6%.
Let’s delve deeper
Q1 Upsides: Omnicell ended the first quarter of 2023 with better-than-expected earnings and revenues, driven by strong execution, disciplined cost management and revenue timing. Reported revenues exceeded the high end of Omnicell’s previous revenue outlook in the band of $273-$283 million, which is highly appreciated. The year-over-year increase in Omnicell’s service revenues emphasizes its digital transformation strategy.
Omnicell is well-positioned to meet pharmacy and hospital needs, backed by the recent acquisitions and expansion of its advanced services solutions. Strong revenue contributions from the recent acquisitions of FDS Amplicare, ReCept and MarkeTouch Media are major tailwinds. The company’s Central Pharmacy Dispensing Service continues to receive more demand from health systems, which buoys optimism.
2025 Roadmap Looks Impressive: In terms of its 2025 financial roadmap, Omnicell aims to generate $1.9-$2 billion in revenues by 2025, suggesting a 14-15% compounded total annual revenue growth rate from 2021 to 2025. Over the same period, it is targeting an expansion of non-GAAP EBITDA margin from 21% in 2021 to 25% by 2025, indicating a margin expansion of approximately 400 bps.
Upbeat Guidance: Total revenues for 2023 are expected in the range of $1.15-$1.19 billion The Zacks Consensus Estimate for total revenues is pegged at $1.17 billion.
The adjusted earnings per share for the full year is expected in the range of $1.55-$1.80. The Zacks Consensus Estimate for the same is pegged at $1.65.
For the second quarter of 2023, Omnicell expects revenues in the range of $278-$288 million, with product revenues expected in the band of $181-$186 million and service revenues in the range of $97-$102 million. The Zacks Consensus Estimate for total revenues in the second quarter of 2023 is pegged at $287.5 million.
Image Source: Zacks Investment Research
The adjusted earnings per share for the second quarter is anticipated in the range of 25-35 cents. The Zacks Consensus Estimate for the same is pegged at 36 cents.
Downsides
Escalating Costs and Expenses: Omnicell adopted several strategies to drive the top line, including portfolio expansion, acquisitions and further penetration in the medication adherence market. Thus, the company continues to battle escalating costs.
In the first quarter, gross profit declined 16.7%. The gross margin contracted 404 basis points (bps) to 43%. Operating expenses were up 2.1% year over year. The operating loss in the quarter totaled $23 million compared to the operating profit of $5.1 million in the year-ago quarter.
Competitive Landscape: Omnicell faces intense competition in the medication management and supply chain solutions market. Even though the company continues to gain market share from other traditional providers of medication management and supply chain solutions, major players such as Becton Dickinson/CareFusion Corporation, ARxIUM, Cerner Corporation, Talyst, Inc., Emerson Electronic Co., WaveMark Inc.
Estimate Trend
In the past 60 days, the Zacks Consensus Estimate for Omnicell’s 2023 earnings has been constant at $1.65.
The Zacks Consensus Estimate for 2023 revenues is pegged at $1.18 billion, suggesting a 9.7% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Addus Homecare Corporation (ADUS - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Davita Inc (DVA - Free Report) .
The Zacks Consensus Estimate for Addus Homecare’s 2023 earnings indicates 10.9% year-over-year growth. The Zacks Consensus Estimate for ADUS’s 2023 earnings has moved 0.5% north in the past 30 days.
Merit Medical reported a first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
DaVita, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.6%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 17.3%.
DaVita has lost 1.9% compared with the industry’s 18% decline in the past year.
Unique Zacks Analysis of Your Chosen Ticker
Pick one free report - opportunity may be withdrawn at any time
Image: Bigstock
Here's Why Investors Should Retain Omnicell (OMCL) Stock Now
Omnicell, Inc. (OMCL - Free Report) is well poised for growth in coming quarters owing to strong execution of strategies, disciplined cost management and revenue timing. An increase in Omnicell’s service revenues emphasizes its digital transformation strategy. However, stiff competition and mounting operating expenses raise apprehension.
In the past year, the Zacks Rank #3 (Hold) stock has plunged 33.6% compared with a 23.7% fall of the industry and a 6.3% drop of the S&P 500.
The renowned medical device solutions provider has a market capitalization of $3.26 billion. Its first-quarter 2023 earnings beat the Zacks Consensus Estimate by 457.1%. The long-term expected growth rate is estimated at 13.7% compared with the industry’s projection of 16.6%.
Let’s delve deeper
Q1 Upsides: Omnicell ended the first quarter of 2023 with better-than-expected earnings and revenues, driven by strong execution, disciplined cost management and revenue timing. Reported revenues exceeded the high end of Omnicell’s previous revenue outlook in the band of $273-$283 million, which is highly appreciated. The year-over-year increase in Omnicell’s service revenues emphasizes its digital transformation strategy.
Omnicell is well-positioned to meet pharmacy and hospital needs, backed by the recent acquisitions and expansion of its advanced services solutions. Strong revenue contributions from the recent acquisitions of FDS Amplicare, ReCept and MarkeTouch Media are major tailwinds. The company’s Central Pharmacy Dispensing Service continues to receive more demand from health systems, which buoys optimism.
2025 Roadmap Looks Impressive: In terms of its 2025 financial roadmap, Omnicell aims to generate $1.9-$2 billion in revenues by 2025, suggesting a 14-15% compounded total annual revenue growth rate from 2021 to 2025. Over the same period, it is targeting an expansion of non-GAAP EBITDA margin from 21% in 2021 to 25% by 2025, indicating a margin expansion of approximately 400 bps.
Upbeat Guidance: Total revenues for 2023 are expected in the range of $1.15-$1.19 billion The Zacks Consensus Estimate for total revenues is pegged at $1.17 billion.
The adjusted earnings per share for the full year is expected in the range of $1.55-$1.80. The Zacks Consensus Estimate for the same is pegged at $1.65.
For the second quarter of 2023, Omnicell expects revenues in the range of $278-$288 million, with product revenues expected in the band of $181-$186 million and service revenues in the range of $97-$102 million. The Zacks Consensus Estimate for total revenues in the second quarter of 2023 is pegged at $287.5 million.
The adjusted earnings per share for the second quarter is anticipated in the range of 25-35 cents. The Zacks Consensus Estimate for the same is pegged at 36 cents.
Downsides
Escalating Costs and Expenses: Omnicell adopted several strategies to drive the top line, including portfolio expansion, acquisitions and further penetration in the medication adherence market. Thus, the company continues to battle escalating costs.
In the first quarter, gross profit declined 16.7%. The gross margin contracted 404 basis points (bps) to 43%. Operating expenses were up 2.1% year over year. The operating loss in the quarter totaled $23 million compared to the operating profit of $5.1 million in the year-ago quarter.
Competitive Landscape: Omnicell faces intense competition in the medication management and supply chain solutions market. Even though the company continues to gain market share from other traditional providers of medication management and supply chain solutions, major players such as Becton Dickinson/CareFusion Corporation, ARxIUM, Cerner Corporation, Talyst, Inc., Emerson Electronic Co., WaveMark Inc.
Estimate Trend
In the past 60 days, the Zacks Consensus Estimate for Omnicell’s 2023 earnings has been constant at $1.65.
The Zacks Consensus Estimate for 2023 revenues is pegged at $1.18 billion, suggesting a 9.7% fall from the year-ago reported number.
Key Picks
Some better-ranked stocks in the broader medical space are Addus Homecare Corporation (ADUS - Free Report) , Merit Medical Systems, Inc. (MMSI - Free Report) and Davita Inc (DVA - Free Report) .
The Zacks Consensus Estimate for Addus Homecare’s 2023 earnings indicates 10.9% year-over-year growth. The Zacks Consensus Estimate for ADUS’s 2023 earnings has moved 0.5% north in the past 30 days.
Addus Homecare has a long-term estimated growth rate of 11.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merit Medical reported a first-quarter 2023 adjusted EPS of 64 cents, beating the Zacks Consensus Estimate by 16.4%. Revenues of $297.6 million surpassed the Zacks Consensus Estimate by 5.9%. It currently carries a Zacks Rank #2.
Merit Medical has a long-term estimated growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20.2%.
DaVita, carrying a Zacks Rank #2 at present, has a long-term estimated growth rate of 14.6%. DVA’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 17.3%.
DaVita has lost 1.9% compared with the industry’s 18% decline in the past year.