Cautious Outlook on Owens & Minor: Sell Rating Amidst Segment Challenges and Tariff Uncertainties

Bank of America Securities analyst Allen Lutz maintained a Sell rating on Owens & Minor (OMI – Research Report) on May 9 and set a price target of $7.00.

Allen Lutz has given his Sell rating due to a combination of factors impacting Owens & Minor’s financial outlook. Despite the solid growth in the Patient Direct segment, the company faces challenges in its Products and Healthcare Services division, which has shown weakness. The potential divestiture of this segment could be beneficial in the long run, but in the short term, there is uncertainty due to possible tariff exposure ranging from $100 to $150 million, which could affect the company’s leverage and the pending acquisition of Rotech.
Additionally, the macroeconomic environment adds further uncertainty, potentially delaying the sale of the P&HS segment. While there is a possibility of upside if tariffs on China are reduced, the current situation leads to a cautious stance on the company’s near-term trajectory. Consequently, the price objective has been adjusted downward to $7.00, reflecting these concerns and the revised estimates for revenue, EBITDA, and EPS for FY25.

According to TipRanks, Lutz is a 5-star analyst with an average return of 9.3% and a 62.81% success rate. Lutz covers the Healthcare sector, focusing on stocks such as Hims & Hers Health, CVS Health, and DENTSPLY SIRONA.