Zacks Investment Research upgraded shares of Omnicell, Inc. (OMCL) from UNDERPERFORM to NEUTRAL on February 21, 2014, with a target price of $29.00.
Omnicell reported an unimpressive fourth quarter with topline beat but bottom line miss from the Zacks Consensus Estimate. Balanced segmental improvement was seen on the back of strong demand to upgrade in G4 platform. However, we are concerned with the escalating product costs and operating expenses. We expect this to continue even in the coming quarter as unfavorable product mix will lead to a drag in gross margin. However, the three-pronged strategy is keeping well with the company's growth performance. While top-line synergy from the MTS acquisition was a major catalyst, several contract wins in the domestic and offshore market are likely to boost organic growth as well. Thus, we are back to our Neutral recommendation on Omnicell.
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