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Omnicell (OMCL) Up 0.4% Since Last Earnings Report: Can It Continue?

Zacks Equity Research

A month has gone by since the last earnings report for Omnicell (OMCL). Shares have added about 0.4% 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 the most recent earnings report in order to get a better handle on the important drivers.

Omnicell Beats on Earnings in Q2

Omnicell, Inc.’s OMCL second-quarter 2019 adjusted earnings per share (EPS) of 67 cents outpaced the Zacks Consensus Estimate by 4.7%.

Also, adjusted EPS surged 45.6% from the year-ago figure and surpassed the company’s guided range of 61-66 cents as well.

Revenues in Detail

Adjusted revenues in the second quarter increased 15.2% year over year to $217.4 million. The top line also trumped the Zacks Consensus Estimate of $213 million.

Quarterly Details

On a segmental basis, Product revenues improved 17.7% year over year to $158.4 million in the reported quarter.

Moreover, Service and other revenues climbed 9.2% year over year to $59 million.

Operational Update

In the quarter under review, Omnicell's adjusted gross profit rose 17.2% to $104 million. Adjusted gross margin expanded 80 basis points (bps) to 47.9%.

Adjusted operating profit totaled $18.8 million, reflecting a 155.8% jump from the prior-year quarter. Adjusted operating margin in the second quarter grew 474 bps to 13%.

SG&A expenses inched up 3.8% year over year to $68.4 million. Moreover, research and development expenses escalated 8.6% year over year to $16.8 million. Also, adjusted operating expenses were $85.2 million in the second quarter, up 4.7% year over year.

Financial Update

Omnicell exited the second quarter with cash and cash equivalents of $87.5 million compared with $77.2 million at the end of the first quarter.

Guidance

For the third quarter of 2019, Omnicell expects adjusted revenues between $227 million and $233 million. The Zacks Consensus Estimate for the metric stands at $231.9 million, within the guided range.

On an adjusted basis, product revenues are expected between $168 million and $173 million while service revenues are projected within $59-$60 million.

Third-quarter adjusted EPS is envisioned in the band of 67-72 cents. The Zacks Consensus Estimate for the same is pegged at 71 cents, close to the upper end of the predicted range.

For 2019, adjusted revenues are now anticipated within $886-$900 million, narrowed from the earlier band of $880-$900 million. The Zacks Consensus Estimate for the same is pinned on $891.9 million, within the guided range.

Product revenues for the full year are estimated within $653-$663 million while service revenues are expected between $233 million and $237 million.

Adjusted EPS is forecast between $2.65 and $2.82 for 2019 (earlier range was $2.62-$2.82). The Zacks Consensus Estimate for the metric stands at $2.77, within the guided range.

How Have Estimates Been Moving Since Then?

Estimates revision followed a flat path over the past two months.

VGM Scores

At this time, Omnicell has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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 #3 (Hold). We expect an in-line return from the stock in the next few months.



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