Zacks Investment Research downgraded shares of Omnicell, Inc. (OMCL) from OUTPERFORM to NEUTRAL on November 06, 2014, with a target price of $34.00.
Omnicell reported mixed third quarter with the top line surpassing the Zacks Consensus Estimate, although the bottom line missed the same. A balanced segmental improvement was seen on the back of strong demand to upgrade to their G4 platform. However, we are concerned with the escalating product costs. We expect this to continue even in the coming quarter as an unfavorable product mix will lead to a drag in gross margin. Yet, the three-pronged strategy is contributing well to the company's growth performance. While top-line synergy from the MTS acquisition was a major catalyst, we are also positive about the synergy from the acquisition of SurgiChem. Besides, several contract wins in the domestic and offshore markets are likely to boost organic growth as well. Accordingly, we are Neutral on Omnicell.
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