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Now is a good time for investors to stock up on Omnicell shares as the pharmacy industry moves towards automation, according to Bank of America. Analyst Allen Lutz initiated coverage of an automated drug management solution provider with a buy rating and $120 target price, saying in a Friday note to customers that he sees a steady increase in demand for Omnicell’s software going forward. “Our ‘Buy’ rating is driven by OMCL’s leading position in the stand-alone pharmacy market and the potential for double-digit growth in revenue and operating leverage over the medium term,” he wrote. “We believe OMCL has a long way to go for growth given the industry’s ongoing transition to stand-alone pharmacies.” While Omnicell operates in a niche environment, Lutz sees growth opportunities in the company’s software-as-a-service (SaaS) offerings and automated solutions. This includes a robot that could help hospitals potentially reduce the number of full-time employees. “The company is steadily gaining market share by moving from a single solution to offering a broad suite of software and services to streamline workflows to support the autonomous pharmacy,” said Lutz. “Our channel reviews convince us that OMCL is an industry leader and can benefit from further pharmacy automation trends.” Lutz also said that Omnicell is “strengthening its moat” by acquiring new companies that can help it enter growing and new niche markets. Omnicell shares are down nearly 44% this year, but Bank of America’s new price targets suggest nearly 18% upside from Thursday’s close. —Michael Bloom of CNBC provided the coverage.
Credit: www.cnbc.com /