Why You Should Consider Buying Omnicell (OMCL) Stock Now
Omnicell, Inc. OMCL has been gaining investor confidence on continued positive results. Over the past year, the company’s share price has outperformed its industry. The stock has gained 31.9% against the industry’s 13.9% decline and the S&P 500’s 6.9% fall.
This leading developer and marketer of end-to-end automation solutions for the medication-use process has a market cap of $2.56 billion. The company has an expected earnings growth rate of 11.8% for the next three to five years.
With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment.
Per our Style Score, Omnicell has a Growth Score of A, which is reflective of its strong potential. Our research shows that stocks with a Growth Style Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best upside potential.
What Makes the Stock an Attractive Pick?
Gains From Non-Acute Care Settings
The significance of medication non-adherence is judged by the associated high cost of up to $290 billion annually and results in mortality rates of approximately 125,000 people a year. Per Omnicell, medication non-adherence leads to 50% of hospital readmissions. According to the Centers for Medicare and Medicaid Services (CMS), 11% of all hospital admissions is related to this issue.
As a result, Omnicell is leaving no stone unturned to boost the medication adherence segment. The company’s acquisitions of MTS Medication Technologies, SurgiChem and Ateb have helped expand the segment. Notably, the same now comprises a wide platform of subscription software, medication packaging and equipment used by pharmacists to make adherence packages. Per management, the company is witnessing positive customer response and a strong uptake of Omnicell VBM 200F globally including the United States, the U.K., Germany and China.
Strategic Collaborations and Buyouts Add Value
The third leg of the strategy including acquisition and partnerships is also progressing successfully. The company's most recent buyout is InPharmics, a Mississippi-based technology and services company, which should help Omnicell expand its Performance Center’s capabilities. Omnicell is witnessing a solid cross-selling momentum within its entire product platform and combined customer base, specifically for its XR2, IV and Performance Center solutions in terms of both the pipeline and bookings.
Profitable International Opportunities
Outside the United States, healthcare providers are increasingly becoming aware of benefits of automation. Considering that the international market is less than 1% penetrated with a very few hospitals adopting medication control systems, Omnicell has specified its second leg of expansion strategies into new markets.
So far, this strategy is driving significant growth in the Non-Acute Care segment of Omnicell. While the company continues to focus on the Middle East and South Africa, it also sees greater adoption of technologies in other parts of the world, the latest one being Australia.
Other Key Picks
Other top-ranked stocks in the broader medical space include Veeva Systems VEEV, Amedisys, Inc. AMED and Illumina, Inc. ILMN.
Veeva Systems’ long-term earnings growth rate is estimated at 19.5%. The stock flaunts a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Amedisys’ long-term earnings growth rate is projected at 18.8%. The stock carries a Zacks Rank of 2.
Illumina’s long-term earnings growth rate is expected at 23.4%. The stock is a Zacks #2 Ranked player.
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