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Omnicell Continues to Pursue Buyouts, Costs on the Rise

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On Sep 14, we issued an updated research report on Omnicell, Inc. (OMCL - Free Report) . We are upbeat about gains from the company’s recent buyouts, while increasing operating expenses are denting the bottom line. The stock carries a Zacks Rank #3 (Hold).

This developer and marketer of end-to-end automation solutions for the medication-use process has been outperforming its industry over the past year. The stock has gained 44.7% versus the industry’s 9.7% rise.

Omnicell has been progressing well with its strategy to grow through acquisitions and collaborations. In this regard, the company's most recent buyout of InPharmics, a Mississippi-based technology and services company, should help it expand the capabilities of its Performance Center. Omnicell is witnessing solid cross-selling momentum within the total product platform and combined customer base, specifically for the company’s IV and Performance Center solutions.

Other recent acquisitions include that of Surgichem, Carolina-based Ateb Inc., Pennsylvania-based Aesynt, MACH4 Pharma Systems (Germany), InPharmics and Avantec Healthcare (U.K.). 

Omnicell’s strategy to foray into new markets, primarily outside the United States, bodes well. This has so far driven significant growth in the company’s Non-Acute Care segment. While Omnicell continues to focus on the Middle East and South Africa, it sees greater adoption of technologies in other parts of the world, the latest one being Australia.

Furthermore, the company’s work on product innovation through R&D buoys optimism. Also, Omnicell is expected to gain from recent launches and digital transformation. Its recent product launches include the XR2 pharmacy robot and the IVX Workflow.

Meanwhile, Omnicell continues to battle escalating costs. Also, the company continues to expect costs to rise on integration of new acquisitions and expenses related to latest launches like XT series and IV workflow.

Also, a dull show by the company's medication adherence business impacted by unfavorable timing of large robot sales raises concern.

Key Picks

Some better-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , Amedisys, Inc. (AMED - Free Report) and Masimo Corporation (MASI - Free Report) .

Intuitive Surgical’s long-term expected earnings growth rate is 14.7%. The stock currently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Amedisys’ long-term expected earnings growth rate is 18.6%. The stock holds a Zacks Rank #1 at the moment.

Masimo’s long-term expected earnings growth rate is 14.8%. The stock holds a Zacks Rank #2 (Buy) at present.

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