Hospital services like those provided by Omnicell, Inc. (OMCL) should exhibit strong growth over the long-term, benefiting from favorable demographic trends, regulatory environments and a lack of nursing staff. The market also remains underpenetrated.
Moreover, the U.S. government’s approval of more than $20 billion in healthcare IT is likely to boost Omnicell’s top-line. A slowly recovering economy will also help the company going forward.
Based on the company’s strong long-term outlook, we upgrade the stock to Outperform with a target price of $15.50. This is based on a P/S multiple of 2.2x our fiscal 2010 revenue estimate.Zacks Investment Research
