After taking a brief step back Friday from its 11% Thursday stock surge, shares of healthcare solutions company Owens & Minor (OMI 2.93%) are marching higher again in Tuesday trading, and they're up 13.8% as of 10:45 a.m. EST.
You can thank the friendly analysts at R.W. Baird for that.
Last week, as you may recall, Owens & Minor stock popped on news that the company would sell its Movianto European logistics business to France's EHDH holding company. The sales price wasn't disclosed, but investors didn't care, heartened simply by the fact that Owens & Minor management promised to take whatever cash it received and apply it to paying down debt.
Now they're getting another reason to like Owens & Minor as Baird steps up to predict "attractive returns in 2020" for investors in the stock. Baird sees "turnaround progress" at Owens & Minor as the company sheds its profits-challenged European business to focus on more lucrative opportunities at home.
Baird also predicts that 2020 will see Owens & Minor "unlock" value in its shares as it reduces "leverage" (i.e., debt), utilizing both proceeds from the Movianto sale and (presumably) the company's still-strong free cash flow. According to data from S&P Global Market Intelligence, Owens & Minor generated nearly $89 million in positive cash profits over the last 12 months.
The more of that cash Owens & Minor applies to paying down debt, the faster management may succeed in unlocking shareholder value.