Hold Rating for Omnicell Amid Tariff Challenges and Competitive Pressures

In a report released yesterday, Allen Lutz from Bank of America Securities reiterated a Hold rating on Omnicell (OMCL – Research Report), with a price target of $30.00.

Allen Lutz’s rating is based on a combination of factors impacting Omnicell’s financial outlook. The company has shown strong top-line growth driven by product innovation and an improved demand environment, which provides some confidence in stabilizing product revenue. However, significant tariff impacts are creating uncertainty regarding the company’s bottom line, with a $50 million unmitigated impact to EBITDA anticipated in FY25. While management is working on mitigation strategies, the full effect of these tariffs is expected to be felt in the latter half of 2025, posing a $40 million headwind.
Additionally, while there is potential for management to adjust pricing to counteract these impacts, doing so could lead to more challenging competitive dynamics, especially with a primary competitor launching a new product cycle. This situation is likely to exert pressure on product margins in the mid-term. Despite Omnicell’s strong position in pharmacy automation and potential for positive EBITDA growth beyond FY25, the current uncertainty and execution risks related to tariff mitigation lead to a Hold rating. The price objective has been adjusted to $30, reflecting these challenges and the associated risks.

In another report released on April 24, Wells Fargo also maintained a Hold rating on the stock with a $38.00 price target.