Omnicell Gains 26.2% in a Year: What's Driving the Stock?

Omnicell, Inc. OMCL has witnessed strong momentum in the past year. Shares of the company have risen 26.2% against 15.7% decline of the industry. The S&P 500 composite has increased 24.2%.With healthy fundamentals and strong growth opportunities, this Zacks Rank #2 (Buy) company appears to be a solid wealth creator for its investors at the moment.Omnicell develops and markets end-to-end automation solutions for the medication-use process. The company's products enable care providers to improve patient safety and increase efficiency by lowering costs. The company categorizes its offerings under Product, service and other. Product revenues come from software-enabled connected devices, software licenses, packaging equipment and other supplies. They also include consumables such as medication adherence packaging, labelling and other one-time-use packaging. Service and Other revenues include post-installation technical support and other related services and Advanced Services.Factors Favoring OMCL’s Share GrowthOmnicell's share price is trending upward, prompted by the introduction of the XT Amplify program. The program is advancing the company’s goal of delivering outcome-centric innovations, having gained market traction with its initial offerings. Additionally, a robust pipeline for Advanced Services portfolio is driving the share price. This optimism, led by a solid third-quarter performance and increasing revenues from Service and Other category, is expected to contribute further.Investors showed optimism about Omnicell’s OmniSphere, a next-generation, cloud-native software workflow engine and data platform. In December, the company announced this groundbreaking new platform, designed to leverage the full power of a cloud-native architecture. The recent announcement bolstered investor confidence in the stock. Omnicell’s 2025 financial roadmap looks impressive. The company is targeting to reach $1.9-$2 billion in revenues by 2025. Additional targets include a non-GAAP gross margin of 52-53% and a non-GAAP EBITDA margin of approximately 23%. As an update on the progress, the company delivered a non-GAAP EBITDA of $39 million in the third quarter of 2024, well above its guidance of $14-$20 million. Additionally, non-GAAP earnings per share of 56 cents exceeded the pre-announced guidance. This success was led by strong cost and operating expense management. Accordingly, these results have positively impacted the stock, contributing to its price increase. Image Source: Zacks Investment ResearchInvestors seem optimistic regarding the updated earnings guidance. On its third-quarter 2024 earnings call, Omnicell raised its adjusted earnings per share (EPS) guidance for 2024. It now expects adjusted EPS to be in the range of $1.65-$1.72 (previously $1.20-$1.50). The company also raised its lower-end revenue guidance. Total revenues are now expected to be $1.10-$1.11 billion (previously $1.07-$1.11 billion).Factors That May Offset OMCL’s GainsIn the third quarter 2024, product revenues declined 16.1% year over year. This was due to headwinds arising from continued supply-chain disruptions, labor shortages, geopolitical instability and inflationary pressures in broader U.S. and global economies. All of these factors are leading to higher costs for the company’s raw materials, which it may not be able to offset from customers through higher prices. Simultaneously, the company is navigating the ongoing healthcare system capital budget and labor constraints, which have continued to affect its Point-of-Care product line. Although health system budgets are starting to improve, it may take some time for them to be allocated, converted into bookings and reflected in Omnicell’s revenues. A Look at OMCL’s EstimatesThe Zacks Consensus Estimate for 2025 EPS has remained unchanged at $1.78 in the past 30 days.Omnicell has an earnings yield of 2.23% compared to the industry’s 8.83% decline. Other Stocks to ConsiderSome other top-ranked stocks in the broader medical space are ResMed RMD, Masimo MASI and Abbott Laboratories ABT. ResMed, carrying a Zacks Rank #2 at present, has an estimated EPS growth rate of 21.1% for 2025. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.ResMed’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.41%. Its shares have risen 31.6% against the industry’s 12.8% decline in the past year.Masimo, carrying a Zacks Rank #2 at present, has an estimated growth rate of 11.8% for 2025. MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 51.4% compared with the industry’s 6.8% growth in the past year. Abbott, carrying a Zacks Rank of #2 at present, has an estimated earnings growth rate of 10% for 2025. It delivered a trailing four-quarter average earnings surprise of 1.64%. ABT’s shares have risen 10.5% in the past six months compared with the industry’s 8.6% growth.Research Chief Names "Single Best Pick to Double"From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abbott Laboratories (ABT): Free Stock Analysis Report Omnicell, Inc. (OMCL): Free Stock Analysis Report ResMed Inc. (RMD): Free Stock Analysis Report Masimo Corporation (MASI): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks