Matteo Colombo
Omnicell (NASDAQ:OMCL) traded lower on Thursday after Wells Fargo downgraded the pharmacy service provider to Underweight from Overweight, citing risks to the company’s year-to-date rally.
The analyst Stan Berenshteyn argues that Omnicell (OMCL) shares have added ~34% this year compared to a ~19% gain in the S&P 500 and notes that "the hurdle for the stock to keep advancing seems high given a premium valuation."
According to Berenshteyn, OMCL, based in Santa Clara, California, is trading at ~21x its EV/EBITDA for the next 12 months, compared to ~17x at the end of 2022 and the five-year average of ~20x.
Even on 2025 consensus estimates, the company’s EV/EBITDA multiple implies a premium to its larger peers such as Becton, Dickinson (BDX) and Baxter International (BAX).
"Accordingly, we think further share advances will be difficult without estimates moving higher, which we think is unlikely," Berenshteyn added, citing difficulties in intra-year bookings conversion and an YoY decline in backlog coverage amid staffing constraints and pressure on hospital budgets.
Trimming his price target on OMCL to $56 from $65 per share, the analyst raised concerns over the consensus estimates for the stock.
Wall Street has remained bullish on Omnicell (OMCL) stock, with an average rating of Buy from analysts. However, Seeking Alpha Author ratings and SA’s Quant System, which consistently beats the market, indicate OMCL as a Hold.