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On Wednesday, Benchmark analyst Bill Sutherland adjusted the price target for Omnicell (NASDAQ:OMCL) shares, reducing it to $40 from the previous $62, while maintaining a "Buy" rating on the stock. This change follows a significant 15% drop in Omnicell’s stock value on Tuesday, contributing to a steep 17.9% decline over the past week and a 51% drop over six months. According to InvestingPro analysis, the stock’s RSI suggests oversold conditions, while the company’s current market capitalization stands at $1.15 billion.
The price adjustment comes in the wake of Omnicell’s announcement that it is decreasing its full-year 2025 non-GAAP EBITDA and EPS forecasts. The revision reflects the anticipated impact of ongoing tariffs, particularly those associated with China. Despite these challenges, InvestingPro data shows the company maintains healthy fundamentals with revenue of $1.14 billion and an EBITDA of $69.1 million in the last twelve months. For investors seeking deeper insights, InvestingPro offers 13 additional investment tips and comprehensive analysis for Omnicell. Despite this, the firm has reaffirmed its bookings and revenue guidance for FY25, supported by strong sales and implementation trends.
Management has quantified the net tariff impact at approximately $40 million for the remainder of the year, considering around $10 million in mitigation efforts, with $5 million of this impact already incorporated into the second-quarter guidance. This forecast presumes that current tariff levels will persist without relief.
Omnicell has been proactively working to minimize supply chain disruptions since the COVID-19 pandemic by diversifying its sources and expanding its geographic supply base. However, the company’s largest exposure continues to be to China. Setting tariffs aside, Omnicell’s business is progressing as anticipated. The company experienced positive developments with the launch of the XT Amplify/Extend products last year. These offerings are designed to enhance the existing XT cabinet installations and have contributed to improved gross margins. Additionally, SaaS & Expert Services are growing at an approximate rate of 10%, which is bolstering the company’s recurring revenue, now accounting for 52% of the total.
Omnicell anticipates that its accelerated efforts to mitigate tariffs will start to show results by the end of this year. In light of these factors, Benchmark’s revised FY25 non-GAAP EBITDA now includes the full net tariff impact of $40 million, as opposed to the previous model. The lingering $15 million tariff impact has been factored into the updated FY26 model, leading to the new price target of $40, which corresponds to a FY26 EV/EBITDA multiple of 11.5x, aligning with the peer group average. Currently trading at an EV/EBITDA of 16.6x and a P/E ratio of 53.6x, InvestingPro’s Fair Value analysis suggests the stock is currently undervalued. Discover comprehensive valuation metrics and expert analysis in the Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Omnicell Inc. reported its first-quarter 2025 financial results, surpassing Wall Street’s expectations with an earnings per share (EPS) of $0.26, compared to the forecasted $0.21. The company achieved a total revenue of $270 million, marking a $24 million increase from the same period last year. Despite these positive results, Omnicell’s stock faced a decline, attributed to broader financial and operational updates discussed during the earnings call. The company continues to focus on expanding its pharmacy automation solutions, with ongoing challenges related to tariffs and supply chain strategies being central topics. Omnicell projects its full-year 2025 revenue to range between $1,115 million and $1,155 million, with anticipated non-GAAP EPS between $1.00 and $1.65. Analysts from Piper Sandler and Freedom Capital Markets raised concerns about the impact of tariffs on Omnicell’s non-GAAP EBITDA, expected to be approximately $40 million for 2025. Despite these challenges, Omnicell remains committed to its long-term strategic initiatives, emphasizing its leadership in medication management automation.
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