It’s a good time for investors to stock up on shares of Omnicell as the pharmacy industry turns toward automation, Bank of America says. Analyst Allen Lutz initiated coverage of the provider of automated solutions for medication management with a buy rating and $120 price target, saying in a note to clients Friday that he sees a strong demand glide path for Omnicell’s software going forward. “Our Buy rating is driven by OMCL’s leadership position in the autonomous pharmacy market and the opportunity for both double digit revenue growth and operating leverage over the intermediate term,” he wrote. “We believe OMCL has a long runway for growth given the ongoing industry shift to autonomous pharmacy.” Although Omnicell operates in a niche environment, Lutz sees growth opportunities within the company’s software as a service (SaaS) offerings and automated solutions. This includes a robot that could help hospitals potentially reduce full-time employees. “The business has steadily gained market share through expanding from a single point solution to offering a broad suite of software and services aimed at optimizing workflows to support autonomous pharmacy,” Lutz said. “Our channel checks give us conviction OMCL is the industry leader and can capitalize on further pharmacy automation trends.” Lutz also said Omnicell is “fortifying its moat” by acquiring new companies that can help it expand into growing and newer niche markets. Shares of Omnicell have plummeted nearly 44% this year, but Bank of America’s fresh price target implies a near 18% upside from Thursday’s close. — CNBC’s Michael Bloom contributed reporting
