Omnicell downgraded to Neutral from Overweight at Piper Sandler

Piper Sandler analyst Jessica Tassan downgraded Omnicell to Neutral from Overweight with a price target of $70, up from $66, post the Q2 results. The analyst expects the company’s fiscal 2024 product revenue to decline year-over-year and sees downside to 2024 consensus estimates which currently imply 6.0% year-over-year products revenue growth. While there is likely some conservatism embedded in Omnicell’s revised fiscal 2023 guidance, its consolidated adjusted EBITDA margins will be constrained through fiscal 2025 as the company winds down the XT product cycle, the analyst tells investors in a research note. Piper believes in the long-term “transformative potential” of Omnicell’s Advanced Services, but considers the stock fairly valued at current levels.