Omnicell Shares Sink to Year Low

On Thursday after the closing bell, Mountain View, Calif.-based Omnicell reported fourth-quarter earnings of $14.5 million, or 40 cents per share, up from a profit of $4.1 million, or 14 cents per share, in the same period a year earlier. Excluding a tax benefit and other items, adjusted earnings were $10.3 million, or 28 cents per share, matching analysts' expectations according to a Thomson Financial survey.

Revenue jumped 35 percent to $57.9 million from $43.1 million.

"As we have said several times, capital equipment business can be lumpy, and this quarter we did see a decline in our product backlog of $3.6 million," said Rob Seim, chief financial officer, during a conference call with analysts. The company now has a product order backlog of $137 million, which Seim said equals "a little more than 2.5 quarters of forward-looking revenue."

Friday afternoon, Omnicell shares fell $5.70, or 22.7 percent, to $19.38. The stock earlier traded as low as $17.61, below a previous 52-week low of $18.28.

Craig-Hallum Capital analyst Steven Crowley kept a "Buy" rating on the stock. He said in a client note Omnicell had a "pretty good quarter," but a disappointing backlog will likely dominate.

"Considering Omnicell's strong momentum coming into (the fourth quarter), along with management's enthusiasm following a large industry trade show in early December, it's obvious that several sizable deals were surprisingly pushed out beyond quarter-end," the analyst wrote.

However, he added that the company does not believe that anything has "structurally altered the business landscape," and stressed that deals were not lost to competitors. In fact, the company continues to take market share from rival Pyxis, a unit of Cardinal Health Inc., Crowley said.

"Management's conclusion is that the fourth quarter represents an anomaly," the analyst wrote. "While not brushing off the company's disappointing fourth-quarter bookings performance, we don't believe that Omnicell's financial momentum will come to a screeching halt."

Thomas Weisel Partners analyst Steven Halper called Omnicell's 2008 backlog guidance solid and kept an "Overweight" rating on the stock.