Analyst Allen Lutz of Bank of America Securities reiterated a Sell rating on Owens & Minor (OMI – Research Report), with a price target of $9.60.
Allen Lutz’s rating is based on a combination of factors surrounding Owens & Minor’s current financial and strategic position. The company reported mixed results, with strong growth in the Patient Direct segment being overshadowed by weaknesses in the Products and Healthcare Services (P&HS) segment. The P&HS segment, which constitutes a significant portion of sales but contributes minimally to EBITDA, is under consideration for divestiture. This move is seen as potentially beneficial for the company’s long-term outlook, but it also highlights the challenges OMI faces in balancing cost reduction, working capital improvements, and debt reduction while investing in growth.
Furthermore, Allen Lutz has adjusted the price objective to $9.60, down from $12, reflecting the increased execution risks associated with the company’s turnaround strategy. The lowered revenue and EBITDA estimates for FY25, driven by reduced expectations from the P&HS segment, along with higher interest expenses and share count, contribute to the Sell rating. The focus remains on the company’s ability to execute its long-term strategy, manage operational challenges, and navigate potential changes in the market environment.
According to TipRanks, Lutz is a 5-star analyst with an average return of 10.5% and a 67.03% success rate. Lutz covers the Healthcare sector, focusing on stocks such as Teladoc, Hims & Hers Health, and Cardinal Health.