Summary
- Owens & Minor capped off a strong 2020, and I expect to see continued momentum for this healthcare products company.
- It's set to benefit from a return of elective procedures and is expanding into new product offerings.
- I highlight the valuation, balance sheet, and risks worth considering.
The COVID pandemic has changed many companies, with some of them being irrevocably impaired by it. The opposite appears to be the case with Owens & Minor (NYSE:OMI), whose fortunes have been reversed by the pandemic. After falling heavily over a 2-year timeframe, OMI’s stock price has rallied by a whopping 446% over the past year. In this article, I show why OMI remains attractively valued, and could see further upside.
(Source: Company website)
Why OMI Is A Buy
Owens & Minor is a global healthcare solutions company that integrates product manufacturing, distribution, and innovative technology services. It has more than 15K employees and over 4K healthcare industry customers. OMI is predominantly Americas-based and has a portfolio of 1,200 branded suppliers. It has a vertically-integrated business model that enables it to self-manufacture and distribute surgical and PPE products.
Starting off with the technical indicators, OMI has demonstrated a reliably positive trend line (see black line below) over the past 200 days. This was the result of impressive earnings performance that beat analyst expectations, including notable earnings beats that surprised by 14% and 34% in Q3’20 and Q4’20, respectively. While OMI is trading 11% above its 50-day moving average of $29.05, I believe this is deserved, considering the recent track record of outperforming expectations.
