Bank of America moved Omnicell to a Buy rating from Neutral, citing the potential for a major product refresh to lift revenue and margins over several years. The bank also lifted its price objective to $70 from $53, pointing to what it expects to be a sustained upgrade cycle as hospitals replace older automated dispensing cabinets on an eight- to 10-year replacement cadence.
The firm highlighted Omnicell’s next-generation automated dispensing cabinet, called Titan XT, as the company’s first meaningful cabinet refresh since 2017. Bank of America said that Titan XT could prompt a multi-year acceleration in connected-device sales that is not captured in current street forecasts.
According to the bank’s analysis, Titan XT shipments are expected to begin in the second half of 2026, which it views as a transition year. The bank cautioned that initial guidance may only show modest revenue contributions late in 2026, and it advised investors to treat any short-term weakness as an entry opportunity given the longer-term trajectory.
On a longer horizon, Bank of America quantified the opportunity, estimating Titan XT could account for more than $900 million in revenue through 2029. That projection rests on upgrades of cabinets originally installed between 2017 and 2020, and the bank placed the total addressable market for the refresh at roughly $2.5 billion.
The bank contrasted its outlook with prevailing consensus assumptions, saying that the Street currently models connected-device revenue growth of just 3% to 4% through 2028. Bank of America expects connected-device revenue growth to reaccelerate to mid-teens rates - a materially faster pace than the consensus view and more in line with growth seen during the prior upgrade cycle.
Bank of America also saw room for margin expansion as the product cycle matures. The firm estimated more than 3 percentage points of upside to consensus EBITDA margins by 2028, driven by higher incremental margins on new products and a rising share of recurring software revenue from Omnicell’s OmniSphere platform.
Valuation was another element of the bank’s bullish case. Omnicell shares, the bank noted, trade at under 13 times what it described as near-trough 2026 EBITDA - below the company’s 10-year average multiple of about 16 times. The bank argued that the greater mix of recurring revenue today could support additional multiple expansion relative to the prior cycle.
Analysis context - The bank’s upgrade and target raise are driven by a combination of product-cycle timing, modeled revenue upside concentrated in connected devices, and potential margin improvement as a greater share of revenues convert to recurring software and higher-margin new-product sales.