Owens & Minor, the Healthcare sector company, was revisited by a Wall Street analyst today. Analyst Allen Lutz from Bank of America Securities reiterated a Sell rating on the stock and has a $4.70 price target.
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Allen Lutz has given his Sell rating due to a combination of factors impacting Owens & Minor’s financial outlook. The company is in the process of divesting its hospital distribution business, which could potentially provide a valuation of 5-6 times EBITDA. However, the remaining Patient Direct segment, while having higher margins, faces challenges in terms of growth, particularly with regulatory hurdles affecting potential acquisitions like the terminated Rotech deal.
Moreover, the growth in the Patient Direct market has slowed, with specific pressures from changes in diabetes supply channels and pricing challenges in Medicare/Medicaid businesses. The company also faces execution risks related to removing stranded costs and reducing leverage. These factors, combined with a reduced price objective and lower revenue and EBITDA estimates for the coming years, contribute to the Sell rating, as the market pressures and execution risks outweigh the potential for growth acceleration.
Lutz covers the Healthcare sector, focusing on stocks such as Doximity, Teladoc, and GoodRx Holdings. According to TipRanks, Lutz has an average return of 6.7% and a 58.80% success rate on recommended stocks.