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Sanara MedTech Inc. SMTI, along with InfuSystem Inc., recently entered into an exclusive U.S. distribution agreement with ChemoMouthpiece, LLC. Sanara will execute the terms of the agreement with the help of SI Healthcare Technologies (SI Technologies), which is a 50/50 joint venture between SMTI and InfuSystem.
ChemoMouthpiece owns and manufactures a clinically validated product named Chemo Mouthpiece — an oral cryotherapy device that brings relief to oral mucositis-affected patients. This device perfectly aligns with Sanara’s skincare strategy. The company further aims to provide the device to oncology patients undergoing chemotherapy.
Following the announcement, shares of Sanara rose 0.5% to $33.51 yesterday. With the company gaining a high level of synergies from its collaborations within the skincare market, we expect market sentiment to remain positive around this development.
About Sanara’s Distribution Agreement With ChemoMouthpiece
Under the agreement, SI Technologies will be the exclusive distributor of ChemoMouthpiece’s kits in the United States. SI Technologies plans to market and distribute the product to approximately 3,000 cancer centers through InfuSystem’s existing sales team. It will purchase the product kits from ChemoMouthpiece at a fixed price and pay a royalty on net revenues for the use of the product's intellectual property.
For investors’ note, the Chemo Mouthpiece is FDA 501(k) approved.
Financial Details
Sanara invested $5 million for a 6.6% ownership in ChemoMouthpiece. Sanara has drawn $15.5 million on its term loan with CRG Servicing, LLC and will fund this investment as part of that draw.
SI Technologies will have the option to purchase the U.S. business of ChemoMouthpiece, including all U.S. intellectual property related to the product. The purchase option will expire on Jan. 31, 2029.
More on the News
Oral mucositis causes painful mouth ulcers, which are a common complication of chemotherapy and radiation. The oral cryotherapy device is expected to reduce material costs for oncology treatment centers, improve patient quality of life and allow for continued treatment of cancer therapy for patients. ChemoMouthpiece is planning to publish studies in the future to reinforce the efficacy of the device.
Pickwick Capital Partners, LLC, served as the exclusive advisor to ChemoMouthpiece on this transaction.
Recent Development by Sanara
Earlier this year, Sanara signed an exclusive license agreement with Tufts University (Tufts) to develop and commercialize patented technology covering 18 unique collagen peptides.
Although Sanara has established itself as a leader in bioactive collagen peptides with CellerateRX Surgical Powder, the company expects to expand the CellerateRX product line and develop new bioactive collagen peptide-based applications. The recently licensed technology from Tufts helped the company to expand its offering of collagen products.
Industry Prospects Favor Sanara
Per a Global Market Insights report, the oral mucositis treatment market was valued at $1.6 billion in 2023 and is expected to witness a CAGR of 7.1% from 2024 to 2032.
Market growth can be attributed to the ongoing advancements in cancer therapy and the increasing prevalence of cancer. Moreover, the rising geriatric population, along with the growing demand for targeted therapies, helps the market surge.
Price Performance by Sanara
In the past year, shares of SMTI have lost 5.8% against the industry’s 18.4% growth.
SMTI’s Zacks Rank and Key Picks
Sanara currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space are Intuitive Surgical ISRG, TransMedics Group TMDX and Boston Scientific BSX. While Intuitive Surgical and TransMedics currently sport a Zacks Rank #1 (Strong Buy) each, Boston Scientificcarries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical’s shares have surged 62.2% in the past year. Estimates for the company’s earnings have moved north 5.1% to $1.65 per share for 2024 in the past 30 days.
ISRG’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 8.97%. In the last reported quarter, it posted an earnings surprise of 16.34%.
Estimates for TransMedics’ 2024 EPS have moved up 125% to 27 cents in the past 30 days. Shares of the company have soared 143.8% in the past year compared with the industry’s 15.8% growth.
TMDX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 287.50%. In the last reported quarter, it delivered an earnings surprise of 66.67%.
Estimates for Boston Scientific’s 2024 EPS have increased 1.7% to $2.40 in the past 30 days. In the past year, shares of BSX have risen 55.9% compared with the industry’s 18.3% growth.
In the last reported quarter, BSX delivered an earnings surprise of 6.90%. Its earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.18%.
Zacks Investment Research
Owens & Minor, Inc. OMI has announced a partnership with Google Cloud, owned by the parent holding company, Alphabet GOOGL to enhance the existing capabilities of its cloud-based clinical inventory management system, QSight. The collaboration will combine the company’s expertise in optimizing the healthcare supply chain with Google Cloud’s Vertex AI platform, to tackle the modern supply chain management complexities and support the patients more effectively.
The latest development demonstrates the progress Owens & Minor has been making toward its strategic goals for the Products & Healthcare Services segment.
Following the news, shares of OMI edged up 0.2% to $14.42 at Tuesday’s close. By staying at the forefront of technology, including making investments with one of the most renowned innovators in the market, the company consistently delivers value to its customers and improves clinician efficiency. We expect the market sentiment on OMI stock to stay positive around this development.
Significance of OMI’s New Partnership
The implications of inefficient inventory management in healthcare can extend beyond the stockroom and into the operating room. This includes the risks of expired products being used in patient care and loss of inventory if products expire before. There is also an increasing pressure to deliver high-quality care while managing costs and optimizing efficiency — with less support from clinical staff.
However, traditional clinical inventory management systems often lack the real-time visibility and predictive capabilities to oversee the complex healthcare supply chains, leading to increasing costs and higher workloads for clinical staff.
The partnership between Owens & Minor and Google Cloud aims to focus on enhancing QSight’s ability to help hospitals and health systems optimize how they manage the thousands of medical-grade supplies, high-value surgical implants and human tissue products required for patient care. The company will also lay the foundation for future platform and service innovations with the potential to improve the QSight customer experience.
Favorable Industry Prospects for Owens & Minor
A report by Research and Markets valued the healthcare inventory management software market at $331.5 million in 2021 and forecasts it to see a compound annual rate of 8.9% through 2028.
The rising complexity of the healthcare supply chain, such as worldwide sourcing, diversified product portfolios, regulatory constraints, and the demand for real-time monitoring, have increased the need for sophisticated inventory management systems. Healthcare organizations are implementing advanced inventory management solutions that provide greater visibility, automation and analytics.
Other Major Developments Within OMI
In July 2024, Owens & Minor announced a definitive agreement to acquire Rotech Healthcare Holdings, Inc., a home medical equipment provider based in the United States, for $1.36 billion in cash. The acquisition directly aligns with the company’s broader strategy to expand into the fast-growing home-based care space. In addition, it also bolsters its Patient Direct product offerings through expansion across a complementary portfolio including Respiratory, Sleep Apnea, Diabetes and Wound Care.
OMI Stock Price Performance
In the past year, Owens & Minor shares have plunged 10.8% against the industry’s 18.4% growth.
OMI Estimate Trend and EPS Surprise History
In the past 30 days, estimates for Owens & Minor’s 2024 earnings have remained constant at $1.57 per share. The company beat estimates in each of the trailing four quarters, the average surprise being 11.1%.
OMI’s Zacks Rank and Top MedTech Stocks
Owens & Minor currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Boston Scientific BSX and AxoGen AXGN, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific’s shares have risen 55.9% in the past year. Estimates for the company’s earnings per share have remained constant at $2.40 in 2024 and $2.71 in 2025 in the past 30 days. BSX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 7.2%. In the last reported quarter, it posted an earnings surprise of 6.9%.
Estimates for AxoGen’s 2024 loss per share have remained constant at 1 cent in the past 30 days. Shares of the company have surged 141.4% in the past year compared with the industry’s growth of 15.7%. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%. In the last reported quarter, it delivered an earnings surprise of 200%.
Zacks Investment Research
The latest trading session saw Intuitive Surgical, Inc. (ISRG) ending at $490.93, denoting a +1.38% adjustment from its last day's close. This move outpaced the S&P 500's daily gain of 1.07%. On the other hand, the Dow registered a gain of 0.31%, and the technology-centric Nasdaq increased by 2.17%.
The company's shares have seen an increase of 3.2% over the last month, not keeping up with the Medical sector's gain of 3.34% and outstripping the S&P 500's gain of 2.92%.
The investment community will be paying close attention to the earnings performance of Intuitive Surgical, Inc. in its upcoming release. In that report, analysts expect Intuitive Surgical, Inc. to post earnings of $1.65 per share. This would mark year-over-year growth of 13.01%. Alongside, our most recent consensus estimate is anticipating revenue of $2.02 billion, indicating a 15.57% upward movement from the same quarter last year.
Regarding the entire year, the Zacks Consensus Estimates forecast earnings of $6.67 per share and revenue of $8.1 billion, indicating changes of +16.81% and +13.69%, respectively, compared to the previous year.
Additionally, investors should keep an eye on any recent revisions to analyst forecasts for Intuitive Surgical, Inc. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.
Our research shows that these estimate changes are directly correlated with near-term stock prices. To exploit this, we've formed the Zacks Rank, a quantitative model that includes these estimate changes and presents a viable rating system.
The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Over the past month, there's been no change in the Zacks Consensus EPS estimate. Intuitive Surgical, Inc. is currently sporting a Zacks Rank of #1 (Strong Buy).
From a valuation perspective, Intuitive Surgical, Inc. is currently exchanging hands at a Forward P/E ratio of 72.65. This indicates a premium in contrast to its industry's Forward P/E of 27.79.
We can additionally observe that ISRG currently boasts a PEG ratio of 4.18. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. The average PEG ratio for the Medical - Instruments industry stood at 2.29 at the close of the market yesterday.
The Medical - Instruments industry is part of the Medical sector. This group has a Zacks Industry Rank of 63, putting it in the top 25% of all 250+ industries.
The Zacks Industry Rank evaluates the power of our distinct industry groups by determining the average Zacks Rank of the individual stocks forming the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.
Zacks Investment Research
The robotics market is booming, with projections calling for a 15.1% CAGR to $169.8 billion by 2032. As a major player, in the global market, the U.S. is expected to rake in $784.6 billion from robotics in 2024 alone, largely due to advancements in artificial intelligence (AI) and automation - and especially generative AI, which has been making headlines.
Money is pouring into robotics companies, too. In July, investments totaled $1.3 billion across 47 deals. One standout example is Serve Robotics , whose stock jumped over 300% in a month after NVIDIA invested $3.7 million.
But if you're thinking about making a robotics investment of your own, it's not necessary to speculate on individual stocks. There are ETFs (exchange-traded funds) that offer broader exposure to the robotics and AI theme, allowing investors to benefit from this megatrend over time. Let's look at three top funds that each take a slightly different approach to investing in robotics.
ROBO Global Robotics & Automation Index ETF (ROBO)
The ROBO Global Robotics & Automation Index ETF is a solid choice for investors seeking exposure to the robotics and automation sectors. Launched in 2013, ROBO is one of the largest and most established robotics ETFs, with $1.07 billion in assets under management.
ROBO tracks the ROBO Global Robotics and Automation Index, which measures the performance of companies in the global robotics and automation industry. The fund holds a diverse portfolio of 79 stocks, with no single holding accounting for more than 2.2% of the ETF's value.
The fund's top holdings include well-known names in the robotics and automation field. Intuitive Surgical , the maker of the da Vinci surgical robot, is among the top five holdings at 2.20%. Other notable companies in the top 5 include wireless sensor specialist Samsara (2.20%), ServiceNow Inc. (2.13%), motion control tech company Novanta Inc. (1.99%), and automation firm Zebra Technologies Corp. (1.99%).
ROBO's performance has been mixed in recent years. While it has shown promise in capturing the growth potential of the robotics and automation sector, it has underperformed the broader S&P 500 Index since its inception. ROBO is down 8.1% on a year to date basis, though the stock's roughly 12% pullback from its annual high may provide an appealing entry point.
ROBO's expense ratio is 0.95%, which is relatively high, but understandable given the fund's specialized focus. Investors also get a small dividend yield of 0.05%.
First Trust Nasdaq Artificial Intelligence and Robotics ETF (ROBT)
The First Trust Nasdaq Artificial Intelligence and Robotics ETF is an attractive option for investors looking to gain exposure to the growing AI and robotics sectors. Launched on Feb. 21, 2018, ROBT tracks the Nasdaq CTA Artificial Intelligence and Robotics Index, focusing on companies involved in AI, robotics, and automation across various industries.
With around $463.7 million in AUM, ROBT is a smaller fund compared to some of its peers, but it's been steadily growing, with a net inflow of $30.56 million over the past year. This growth shows increasing investor interest in the potential of AI and robotics technologies.
The ETF holds a diverse portfolio of 114 stocks, which provides broad exposure to the sector while mitigating single-stock risk. Top holdings feature big names like new S&P 500 member Palantir Technologies (2.96%), AI fintech platform Upstart Holdings (2.51%), cloud software company ServiceNow (2.41%), cybersecurity stock SentinelOne (2.37%), and genetic testing specialist Illumina Inc. (2.25%). The ETF's passive management style aims to replicate the performance of its underlying index, giving investors a comprehensive view of the sector's potential.
ROBT is down 10% in 2024, providing an opportunity to buy the dip in this growth-focused ETF.
One of ROBT's strengths is its relatively low expense ratio of 0.65%, which is competitive for a specialized thematic ETF. This lower cost structure can help preserve returns for investors over the long term.
ROBT also offers a modest dividend yield of 0.28%, paid quarterly. While not substantial, this provides a small income stream for investors, which is uncommon among many growth-oriented tech ETFs.
For investors seeking targeted exposure to AI and robotics while tempering the risks associated with picking individual stocks, ROBT offers a balanced approach with its mix of established and emerging companies in the field.
Global X Robotics & Artificial Intelligence ETF (BOTZ)
The Global X Robotics & Artificial Intelligence ETF is a popular choice for investors seeking to capitalize on the growth potential of robotics and AI. Launched in 2016, BOTZ tracks the Indxx Global Robotics & Artificial Intelligence Thematic v2 Index, which focuses on companies that could benefit from increased adoption and utilization of robotics and artificial intelligence.
BOTZ has a significant asset base of $2.55 billion, making it one of the largest robotics ETFs. The fund holds a concentrated portfolio of 44 stocks, with a strong emphasis on large-cap companies, which account for 51.5% of its holdings.
The top five holdings include global tech industry leaders NVIDIA (11.04%), Intuitive Surgical (10.64%), Swiss automation giant ABB Ltd (9.96%), Japanese sensor specialist Keyence Corp (8.05%), and Tokyo-based automation company SMC Corp (5.79%). This diverse mix across various industries and regions helps reduce risk, while providing exposure to the key players driving innovation in robotics, AI, and automation.
Performance-wise, BOTZ has been on a slow but steady upward trend over the past year, with a 52-week gain of 15.1%. Its 2024 performance has been more modest, with a 4.8% gain, but the ETF has outperformed its rival robotics ETFs - likely due to its heavy NVDA exposure. That said, with BOTZ down 11% from its March highs, investors can still buy the dip on this ETF.
BOTZ also has a relatively low expense ratio of 0.68%, which is competitive for a thematic ETF. The fund offers a modest dividend yield of 0.16%, making it more suitable for growth-oriented investors rather than those seeking income.
Conclusion
In conclusion, with the robotics, automation, and AI industries poised for significant long-term growth, investing in ETFs like ROBO, ROBT, and BOTZ offers a smart way to tap into this exciting trend. Each fund has its own twist, from ROBO's broad market approach to BOTZ's concentrated bet on industry leaders. While the returns have been muted so far, the explosive growth potential in robotics and AI makes them worth a look for patient investors with a longer-term time frame.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
Intuitive Surgical, Inc. (ISRG) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term.
Shares of this company have returned +3.2% over the past month versus the Zacks S&P 500 composite's +2.9% change. The Zacks Medical - Instruments industry, to which Intuitive Surgical belongs, has gained 3.5% over this period. Now the key question is: Where could the stock be headed in the near term?
Although media reports or rumors about a significant change in a company's business prospects usually cause its stock to trend and lead to an immediate price change, there are always certain fundamental factors that ultimately drive the buy-and-hold decision.
Revisions to Earnings Estimates
Rather than focusing on anything else, we at Zacks prioritize evaluating the change in a company's earnings projection. This is because we believe the fair value for its stock is determined by the present value of its future stream of earnings.
Our analysis is essentially based on how sell-side analysts covering the stock are revising their earnings estimates to take the latest business trends into account. When earnings estimates for a company go up, the fair value for its stock goes up as well. And when a stock's fair value is higher than its current market price, investors tend to buy the stock, resulting in its price moving upward. Because of this, empirical studies indicate a strong correlation between trends in earnings estimate revisions and short-term stock price movements.
For the current quarter, Intuitive Surgical is expected to post earnings of $1.65 per share, indicating a change of +13% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
The consensus earnings estimate of $6.67 for the current fiscal year indicates a year-over-year change of +16.8%. This estimate has remained unchanged over the last 30 days.
For the next fiscal year, the consensus earnings estimate of $7.66 indicates a change of +14.8% from what Intuitive Surgical is expected to report a year ago. Over the past month, the estimate has remained unchanged.
Having a strong externally audited track record, our proprietary stock rating tool, the Zacks Rank, offers a more conclusive picture of a stock's price direction in the near term, since it effectively harnesses the power of earnings estimate revisions. Due to the size of the recent change in the consensus estimate, along with three other factors related to earnings estimates, Intuitive Surgical is rated Zacks Rank #1 (Strong Buy).
The chart below shows the evolution of the company's forward 12-month consensus EPS estimate:
12 Month EPS
Projected Revenue Growth
While earnings growth is arguably the most superior indicator of a company's financial health, nothing happens as such if a business isn't able to grow its revenues. After all, it's nearly impossible for a company to increase its earnings for an extended period without increasing its revenues. So, it's important to know a company's potential revenue growth.
In the case of Intuitive Surgical, the consensus sales estimate of $2.02 billion for the current quarter points to a year-over-year change of +15.6%. The $8.1 billion and $9.38 billion estimates for the current and next fiscal years indicate changes of +13.7% and +15.8%, respectively.
Last Reported Results and Surprise History
Intuitive Surgical reported revenues of $2.01 billion in the last reported quarter, representing a year-over-year change of +14.5%. EPS of $1.78 for the same period compares with $1.42 a year ago.
Compared to the Zacks Consensus Estimate of $1.97 billion, the reported revenues represent a surprise of +2.02%. The EPS surprise was +16.34%.
The company beat consensus EPS estimates in each of the trailing four quarters. The company topped consensus revenue estimates three times over this period.
Valuation
No investment decision can be efficient without considering a stock's valuation. Whether a stock's current price rightly reflects the intrinsic value of the underlying business and the company's growth prospects is an essential determinant of its future price performance.
While comparing the current values of a company's valuation multiples, such as price-to-earnings (P/E), price-to-sales (P/S) and price-to-cash flow (P/CF), with its own historical values helps determine whether its stock is fairly valued, overvalued, or undervalued, comparing the company relative to its peers on these parameters gives a good sense of the reasonability of the stock's price.
The Zacks Value Style Score (part of the Zacks Style Scores system), which pays close attention to both traditional and unconventional valuation metrics to grade stocks from A to F (an An is better than a B; a B is better than a C; and so on), is pretty helpful in identifying whether a stock is overvalued, rightly valued, or temporarily undervalued.
Intuitive Surgical is graded F on this front, indicating that it is trading at a premium to its peers. Click here to see the values of some of the valuation metrics that have driven this grade.
Conclusion
The facts discussed here and much other information on Zacks.com might help determine whether or not it's worthwhile paying attention to the market buzz about Intuitive Surgical. However, its Zacks Rank #1 does suggest that it may outperform the broader market in the near term.
Zacks Investment Research
Whether you're a growth, value, income, or momentum-focused investor, building a successful investment portfolio takes skill, research, and a little bit of luck.
How do you find the right combination of stocks that will generate returns that could fund your retirement, or your kids' college tuition, or your short- and long-term savings goals?
Enter the Zacks Rank.
What is the Zacks Rank?
The Zacks Rank is a unique, proprietary stock-rating model that utilizes earnings estimate revisions to help investors build a winning portfolio.
There are four main factors behind the Zacks Rank: Agreement, Magnitude, Upside, and Surprise.
Agreement is the extent to which all brokerage analysts are revising their earnings estimates in the same direction. The greater the percentage of analysts revising their estimates higher, the better chance the stock will outperform.
Magnitude is the size of the recent change in the consensus estimate for the current and next fiscal years.
Upside is the difference between the most accurate estimate, which is calculated by Zacks, and the consensus estimate.
Surprise is made up of a company's last few quarters' earnings per share surprises; companies with a positive earnings surprise are more likely to beat expectations in the future.
These four factors are assigned a raw score that's recalculated every night, which is then compiled into the ranking system. Stocks are classified into five groups using this data, ranging from "Strong Buy" to "Strong Sell."
The Power of Institutional Investors
The Zacks Rank also allows individual investors, or retail investors, to benefit from the power of institutional investors.
These professionals manage the trillions of dollars invested in hedge funds, mutual funds, and investment banks, and studies have shown that they can and do move the market because of the large amounts of money they invest with. Thus, the market tends to move in the same direction as institutional investors.
These investors are known for designing valuation models that focus on earnings and earnings expectations in order to figure out the fair value of a company and its shares. If earnings estimates are raised, it puts a higher value on a company.
Institutional investors then act on these changes in earnings estimates, typically buying stocks with rising estimates and selling those with falling estimates; an increase in earnings estimates can translate into higher stock prices and bigger gains for the investor.
Retail investors who get in at the first sign of upward revisions have a distinct advantage over larger investors since it can often take weeks, if not months, for an institutional investor to build a position. They'll also benefit from the expected institutional buying that could follow.
Not only can the Zacks Rank help you take advantage of trends in earnings estimate revisions, but it can also provide a way to get into stocks that are highly sought after by professionals.
How to Invest with the Zacks Rank
The Zacks Rank is known for transforming investment portfolios. In fact, a portfolio of Zacks Rank #1 (Strong Buy) stocks has beaten the market in 26 of the last 32 years, with an average annual return of +25.41%.
Moreover, stocks with a new #1 (Strong Buy) ranking have some of the biggest profit potential, while those that fell to a #4 (Sell) or #5 (Strong Sell) have some of the worst.
Let's take a look at
Intuitive Surgical, Inc. (ISRG)
, which was added to the Zacks Rank #1 list on July 20, 2024.
Headquartered Sunnyvale, CA, Intuitive Surgical Inc designs, manufactures and markets the da Vinci surgical system, Ion endoluminal system and related instruments and accessories. The da Vinci surgical system is an advanced robot-assisted surgical system. The surgical system comprises a surgeon’s console, patient-side cart, 3-D vision system, da Vinci Skills Simulator and Firefly Fluorescence Imaging.
For fiscal 2024, 11 analysts revised their earnings estimate upwards in the last 60 days, and the Zacks Consensus Estimate has increased $0.41 to $6.67 per share. ISRG boasts an average earnings surprise of 9%.
Earnings are expected to grow 16.8% for the current fiscal year, while revenue is projected to increase 13.7%.
Additionally, ISRG has climbed higher over the past four weeks, gaining 3.2%. The S&P 500 is up 2.9% in comparison.
Bottom Line
With a #1 (Strong Buy) ranking, positive trend in earnings estimate revisions, and strong market momentum, Intuitive Surgical, Inc. should be on investors' shortlist.
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Omnicell OMCL is moving closer to achieving the industry-defined vision of Autonomous Pharmacy through automation and advanced services across its cloud-based platform. The company is on track to meet its 2025 financial goals, supported by increasing tech services and long-term customer partnerships. Its strategic expansion into new regions is also encouraging. However, headwinds from competitive pressures and macroeconomic challenges could adversely affect the company’s performance.
In the past year, this Zacks Rank #3 (Hold) stock has declined 20.8% compared to the 6.1% fall of the industry and the 21.1% growth of the S&P 500 composite.
The renowned healthcare technology company has a market capitalization of $2.05 billion. Omnicell surpassed estimates in all the trailing four quarters, delivering an average earnings surprise of 122.04%.
Tailwinds for OMCL Stock
Autonomous Pharmacy Model Holds Potential: Omnicell is aiming to achieve the industry vision of Autonomous Pharmacy with its medication management infrastructure. By delivering automation, intelligence and advanced services through a single, cloud-based platform, the company is empowering healthcare and pharmacy providers to increase healthcare value and improve patient outcomes. Among its key Point-of-Care product market, the company expects further expansion as customers increase the use of dispensing systems within their hospitals and ambulatory care settings.
The Central Pharmacy and IV Compounding market offers significant automation opportunities for high volumes of manual, repetitive and error-prone processes. Meanwhile, in the Retail, Institutional and Payer markets, the shift toward outpatient care from convenient settings also presents a big opportunity.New technologies and increasing pharmacist roles are spurring innovation and clinical services in retail pharmacies. This, along with value-based care, is expected to drive the adoption of Omnicell’s patient engagement solutions.
2025 Roadmap Looks Impressive: Omnicell is aiming to reach $1.9 billion-$2 billion of revenues by 2025, representing a CAGR of 14%-15% in the 2021-2025 period. Additional targets include a non-GAAP gross margin of 52%-53% and a non-GAAP EBITDA margin of approximately 23%. The company delivered a non-GAAP EBITDA of $40 million in the second quarter of 2024, outpacing the previous guidance. Non-GAAP earnings per share benefitted from robust revenue execution, and strong cost and operating expense management. Driven by factors like growing tech services revenues, benefits from long-term sole source customer partnerships and more, the company looks poised to deliver on the 2025 total revenue growth targets.
Planned Geographic Expansion Another Upside: Healthcare providers outside the United States are becoming increasingly aware of the benefits of automation, with substantial demand for adherence packaging equipment. Many government and private entities are heavily investing in information technology and automation, inspired by the recent advancements in the United States. Omnicell intends to strategically expand into new markets, given that the international market is less than 1% penetrated with very few hospitals adopting medication control systems. Presently, the company’s efforts are centered in Canada, Europe, the Middle East and the Asia-Pacific regions and supply chain efforts in Asia.
Concerns for OMCL Stock
Competitive Landscape: Omnicell faces intense competition in the medication management and supply chain solutions market from major players such as Becton Dickinson, ARxIUM. Direct competitors like AutoMed Technologies, Inc. (a subsidiary of ARxIUM) and RX Systems, Inc. also pose threats as they spearhead several expansion programs. This increased competition could result in pricing pressure and reduced margins for the company.
Macroeconomic Issues: Heightened inflationary pressures, supply chain disruptions, labor shortages and geopolitical instability are affecting the broader U.S. and global economies. These can potentially lead to higher costs for the company’s raw materials and other components, which it may not be able to offset from customers through higher prices. Simultaneously, Omnicell is navigating the ongoing healthcare capital budget and labor constraints, which have continued to impact its Point-of-Care product line. However, health system budget improvements are not likely to favor Omnicell’s revenues immediately.
OMCL Estimate Trend
The Zacks Consensus Estimate for OMCL’s 2024 earnings per share has increased 12.9% to $1.40 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2024 revenues is pegged at $1.08 billion. This suggests a 5.8% fall from the year-ago reported number.
Top MedTech Stocks
Some other top-ranked stocks in the broader medical space are TransMedix Group TMDX, AxoGen AXGN and Boston Scientific BSX. While TransMedix Group currently sports a Zacks Rank #1 (Strong Buy), AxoGen and Boston Scientific carry a Zacks Rank #2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
TransMedix Group’s earnings are expected to surge 257.1% in 2024. Its shares have soared 127.9% compared with the industry’s 13.9% rise in the past year.
TMDX’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 287.5%.
AxoGen has an estimated 2024 earnings growth rate of 94.1% compared with the industry’s 12.9%. Shares of the company have soared 126.3% compared with the industry’s 13.9% rise over the past year.
AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%.
Boston Scientific has an estimated earnings growth rate of 17.1% compared with the industry’s 14.8%. Shares of the company have rallied 52.2% compared with the industry’s 16.9% rise over the past year.
BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%.
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