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Why Is Omnicell (OMCL) Down 5% Since the Last Earnings Report?

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About a month has gone by since the last earnings report for Omnicell, Inc. (OMCL - Free Report) . Shares have lost about 5% in that time frame, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Recent Earnings

Omnicell reported earnings per share of 42 cents in third-quarter 2017, beating the Zacks Consensus Estimate by a penny. Earnings improved from the year-ago figure of 40 cents as well.

Revenues in Detail

Revenues during the third quarter increased 5.7% year over year to $186.8 million, missing the Zacks Consensus Estimate of $192 million. The year-over-year upside was driven by the product sensation and related ramp-up of the XT Series launch. Revenues also lagged the company’s guided range of $188 million to $194 million owing to the impact of the Harvey and Irma hurricanes.

On a segmental basis, Omnicell’s Automation and Analytics revenues inched up 1.5% year over year in the third quarter to $154.7 million.

However, revenues at the Medication Adherence segment rose 32.2% year over year to $32.1 million.

Operational Update

Omnicell's gross profit during the reported quarter increased 4.1% to $84.9 million. Gross margin contracted 70 basis points (bps) to 45.4%. According to the company, adjusted gross margin in the third quarter was 47.6%, reflecting a contraction of 310 bps year over year.

SG&A expenses in the third quarter declined 4.2% year over year to $58.7 million. Research and development expenses rose 7.5% year over year to $16.4 million. Operating expenses were $75.1 million in the third quarter, down 1.9% year over year.

According to the company, adjusted operating expenses in the quarter totaled $67.2 million, down 1.9% from the year-ago quarter.

Financial Update

Omnicell exited third-quarter 2017 with cash and cash equivalents of $7.5 million, compared with $26.9 million at the end of second-quarter 2017.

2017 Guidance

For full-year 2017, Omnicell expects product bookings in the range of $570-$590 million (unchanged from the earlier forecast). The company has slashed the high end of the earlier guidance for adjusted revenues from the band of $720-$740 million to $720-$726 million. Moreover, the company now expects adjusted earnings in the band of $1.27 to $1.33 per shareas compared with $1.22 to $1.34 projected earlier. The Zacks Consensus Estimate for full-year earnings per share is pegged at $1.29. The Zacks Consensus Estimate for full-year revenues stands at $730.3 million.

The company also issued its fourth-quarter 2017 guidance. Management expects adjusted revenues in the band of $201-$207 million. Omnicell projects fourth-quarter 2017 adjusted earnings between 49 cents and 55 cents. The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $207.1 million and earnings per share at 53 cents.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

Omnicell, Inc. Price and Consensus

 

Omnicell, Inc. Price and Consensus | Omnicell, Inc. Quote

 

VGM Scores

At this time, the stock has a subpar Growth Score of D, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated also a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate investors will probably be better served looking elsewhere.

Outlook

The stock a Zacks Rank # 5 (Strong Sell). We are expecting a below average return from the stock in the next few months.


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