Zacks Investment Research downgraded shares of Omnicell, Inc. (OMCL) from NEUTRAL to UNDERPERFORM on November 22, 2013, with a target price of $22.00.
Omnicell reported an uninspiring third quarter with adjusted EPS and revenues both unable to beat the Zacks Consensus Estimate. Although balanced segmental improvement was seen on the back of solid win of U.S. government orders, we are concerned with the escalating product costs and operating expenses. The company expects this to continue even in the coming quarter as unfavorable product mix will lead to drag in gross margin. Meanwhile, the company continues to face competitive pressure in the medication management and supply chain solutions market from larger players. Additionally, constrained hospital spending remains an overhang. Although Omnicell is optimistic about its three-leg strategy, the near-term visibility is still not clear. Thus, we downgrade Omnicell to Underperform.
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