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Why Owens & Minor Stock Soared More Than 25% Today

By Rich Smith - May 26, 2021 at 1:06PM

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The market is cheering the updates that the medical device maker delivered during its Investor Day presentations.

What happened

Shares of medical and surgical equipment manufacturer Owens & Minor (OMI -6.51%) were on a tear Wednesday, rising a solid 25.7% through 1 p.m. EDT in response to updates the company delivered at its 2021 Investor Day event.

So what

So what did Owens & Minor say to get investors so excited? Oh, just that it expects to grow its business from the $8.5 billion in revenue it booked last year to "in excess of $12 billion" by 2026.  

In just five years' time, says management, Owens & Minor will grow its revenue stream by roughly 50%, and produce $6 per share in adjusted earnings. For comparison, normalized earnings for all of last year were $1.42, so the company anticipates transforming 50% sales growth into a four-fold increase in profits.

I can see how investors might find that prospect appealing.

Arrow angles up on a green stock chart

Image source: Getty Images.

Now what

Granted, pie-in-the-sky promises are hardly unheard of on Wall Street, but Owens & Minor also gave investors a nearer-term yardstick by which to measure its progress toward its 2026 goals.

Based on the company's recent "exceptional performance," CEO Edward Pesicka says that as early as 2022, the company should be earning between $3 and $3.50 per share. Not only would that be better than 100% growth from its 2020 numbers, it would be about six times higher than 2019's adjusted earnings, notes the CEO. That would put Owens & Minor on a path toward "doubling our earnings guidance from 2022" by 2026.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Owens & Minor, Inc. Stock Quote
Owens & Minor, Inc.
OMI
$31.45 (-6.51%) $-2.19

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