Analyst Attributes Two Issues For Owens & Minor's Shares Sell Off

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  • Owens & Minor Inc OMI reduced its FY22 adjusted EPS guidance of $2.50 - $2.60 from the previous guidance of $2.85 - $3.15.
  • OMI expects adjusted EBITDA of $527-$537 million, compared to the earlier forecast of $570-$610 million.
  • This revision is owing to the underperformance in the Products & Healthcare segment. OMI noted that this segment was struggling more than anticipated owing to macro headwinds, higher levels of customer inventories, and lower hospital procedure volume.
  • Credit Suisse says two issues have driven the sharp sell-off:
    • First, investors perceived that the company had sounded on track for 3Q when it presented at healthcare conferences in September, making the management and estimate changes seem abrupt. 
    • Second, there is confusion about whether the estimate revision puts OMI at risk relative to its leverage covenants. 
  • The analyst reduced its EPS estimates for FY22/23/24 to $2.52/$2.25/$2.75 (was $3.00/$3.47/$3.97).
  • It also reduced the price target from $37 to $20, with a Neutral rating.
  • Price Action: OMI shares are down 1.82% at $15.09 on the last check Friday.
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