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Omnicell (OMCL) Up 27.9% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Omnicell (OMCL - Free Report) . Shares have added about 27.9% in that time frame, outperforming the S&P 500.

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

Omnicell Gains Ground on Impressive Overall Growth in Q4

Omnicell delivered adjusted earnings per share (EPS) of 70 cents in fourth-quarter 2018, beating the Zacks Consensus Estimate of 67 cents.

Adjusted earnings improved 27.3% from the year-ago figure and also surpassed the company’s guided range of 64-69 cents.

Full-year adjusted earnings came in at $2.09 per share, reflecting a 48.2% surge from the year-ago period. Moreover, the figure exceeded the Zacks Consensus Estimate of $2.04.

Revenues in Detail

Adjusted revenues in the fourth quarter increased 7.7% year over year to $211.8 million. However, the top line missed the Zacks Consensus Estimate by 1.3%.

The company reported 2018 revenues of $787.3 million, up 10.3% from the year-earlier period. But the number lagged the Zacks Consensus Estimate of $790.2 million.

Quarterly Details

On a segmental basis, Automation and Analytics revenues increased 9.9% year over year in the reported quarter to $177.6 million.

Moreover, revenues at the Medication Adherence segment inched up 1.9% year over year to $34.1 million.

Operational Update

Omnicell's gross profit in the reported quarter rose 9.3% to $102.1 million. Gross margin expanded 65 basis points (bps) to 48.3%.

SG&A expenses in the fourth quarter escalated 7.9% year over year to $66.3 million. Research and development expenses were up 6.9% year over year to $16.9 million. Operating expenses were $83.3 million in the fourth quarter, up 7.7% year over year.

Operating profit in the quarter under review totaled $18.9 million, up 16.8% from the prior-year quarter. Operating margin in the fourth quarter rose 69 bps to 8.9%.

Financial Update

Omnicell exited 2018 with cash and cash equivalents of $67.2 million compared with $32.4 million at the end of 2017.

2019 Guidance

For the first quarter of 2019, Omnicell expects adjusted revenues in the band of $196-$202 million. The company expects first-quarter adjusted earnings per share within 38-43 cents. The Zacks Consensus Estimate for first-quarter revenues is pegged at $204.2 million, ahead of the guided range. The consensus estimate for EPS of 37 cents lies below the projected range.

For 2019, Omnicell raised product bookings to $745-$780 million. The company’s full year expects adjusted revenues in the band of $880-$900 million. The Zacks Consensus Estimate for full-year revenues stands at $878.1 million, falling short of the company’s forecast.

Omnicell expects adjusted EPS in the range of $2.40-$2.60. The Zacks Consensus Estimate for full-year earnings is pegged at $2.40, in line with the lower end of the company’s expectation.

How Have Estimates Been Moving Since Then?

Fresh estimates followed an upward path over the past two months. The consensus estimate has shifted -9% due to these changes.

VGM Scores

Currently, Omnicell has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. However, the stock was allocated 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 B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Omnicell has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.




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