Auriga Downgrades Omnicell (OMCL) to Hold; Tougher Competition on Continued Lackluster Hospital Spending

October 20, 2009 9:52 AM EDT

Auriga downgrades Omnicell (Nasdaq: OMCL) from Buy to Hold. price target lowered to $12 from $13.

Auriga analyst says, "The combination of a continued lackluster hospital spending environment, heated competition from CareFusion (NYSE: CFN) (NR) and, more recently, Cerner (Nasdaq: CERN) (HOLD), and uncertainty over Omnicell’s FY10 outlook leads us to reduce our price target to $12 from $13 and downgrade the shares to HOLD. While the company has excellent visibility into the balance of FY09, we think some substantial new business wins will be required to restore Omnicell to double-digit top-line growth in FY10. We believe our estimates, which reflect mid-single-digit growth, accurately reflect this cautious tone, but a combination of spending deferrals and intensifying competition could skew the forecast. We think a CFN-like multiple of 18x ($0.44 FY10 Estimate) is appropriate to use with OMCL, and add the company’s near $4/share in cash to derive our $12 target."

To see more analyst ratings on OMCL Click Here.

Omnicell, Inc. provides medication control and patient safety solutions for acute care health facilities.

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