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Investing.com - UBS lowered its price target on Owens & Minor (NYSE:OMI) to $7.00 from $13.00 on Wednesday, while maintaining a Buy rating following the company’s disappointing second-quarter results and outlook.
The firm cited several factors for the significant price target reduction, including near-term dis-synergies from the Patient & Healthcare Services (P&HS) sale and the loss of Kaiser impacting 2026 EBIT. UBS estimates the potential proceeds from the P&HS sale at approximately $700 million, which could allow Owens & Minor to reduce its debt.
Despite the lowered outlook, UBS identified potential upside opportunities including tighter management focus on Diabetes recovery and Sleep momentum, reduced risk exposure to challenged hospital purchasing, and improved working capital as the company shifts away from less profitable, capitated business. While currently unprofitable, InvestingPro data shows analysts expect the company to return to profitability this year, with an EPS forecast of $1.24 for FY2025. Get access to 12 more exclusive InvestingPro Tips and comprehensive analysis in the Pro Research Report.
The revised valuation is anchored to 7x next twelve months plus trailing twelve months EBITDA less Patient Capex, which UBS notes is consistent with closest peer AHCO’s current trading multiple.
UBS has significantly lowered its EBITDA and EPS estimates to remove P&HS operations and assumes capital expenditure efficiencies by 2027, but does not factor in potential tailwinds from changes to tax policy through OBBA.
In other recent news, Owens & Minor Inc. reported its Q2 2025 financial results, showing a mixed performance. The company announced earnings per share (EPS) of $0.26, which did not meet the analysts’ forecast of $0.29, resulting in a 10.34% shortfall. Despite this, Owens & Minor achieved a revenue of $682 million, representing a 3.3% increase compared to the same period last year. This revenue growth was overshadowed by the disappointment in earnings, as reflected in the market’s reaction. These developments are significant for investors who closely monitor earnings and revenue figures. There were no reports of mergers or acquisitions involving Owens & Minor in this period. Additionally, no analyst upgrades or downgrades were noted in the recent updates. Investors will be keen to see how the company addresses these financial challenges in the coming quarters.
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