BofA sees termination of Owens–Rotech deal as surprising but potentially positive
Investing.com -- Bank of America said Owens & Minor's decision to terminate its planned acquisition of Rotech Healthcare was unexpected but may ultimately prove beneficial, allowing the company to refocus on its core operations and potential asset sales.
The companies mutually agreed to cancel the deal after determining that regulatory clearance was unlikely. Owens & Minor (NYSE:OMI) cited antitrust concerns raised by the U.S. Federal Trade Commission in certain regional markets. The transaction was previously expected to close in the first half of 2025.
OMI will incur about $100 million in costs related to the termination, including an $80 million payment to Rotech. It also plans to redeem $1 billion in notes issued in April and cancel associated loan commitments intended to fund the acquisition.
'This news is surprising to us given the competitive landscape in the durable medical equipment space,' BofA analysts wrote, noting they did not view the merger as anti-competitive. However, they said the move could benefit Owens & Minor by eliminating a complex integration and allowing management to focus on operations and cost control.
Rotech had been expected to add 15 cents to earnings per share by the second year, but BofA noted the deal was highly dependent on synergies and Rotech's recent growth was weak, with revenue down 4% year-over-year in 2024.
BofA reiterated its 'Underperform' rating on the stock but raised its price objective to $7.50 from $7.00, citing increased clarity on strategy and a lower debt burden. The firm expects Owens & Minor to continue pursuing smaller acquisitions in its Patient Direct business and to push ahead with a potential sale of its Products and Healthcare Services (NASDAQ:HCSG) unit.
Related articles
BofA sees termination of Owens–Rotech deal as surprising but potentially positive
U.S. Treasury, Commerce secretaries and Trade Representative to meet Chinese reps
Neo Performance Materials stock surges on buyback plan
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
2 hours ago
- Yahoo
Is SoundHound AI the Top Artificial Intelligence Stock to Buy in June?
SoundHound AI has a broad target market. SoundHound posted incredible revenue growth during the first quarter. Investors will need to pay a premium to own the stock. 10 stocks we like better than SoundHound AI › SoundHound AI (NASDAQ: SOUN) is one of the more popular small company picks in the AI realm. With a market capitalization of less than $4 billion, SoundHound could have a huge runway if its products continue to resonate with clients. But is it the best AI stock to buy in June? Let's take a look. SoundHound AI has taken a different approach to AI than many companies. Instead of focusing on interacting with a generative AI model by using text input from a keyboard, it uses audio inputs. This isn't anything innovative or new; AI assistants like Siri or Alexa have been around for a long time, and have frustrated users for that same duration. However, SoundHound AI's products are far superior to some others and have even been found to outperform human counterparts in some applications, such as taking orders at drive-thru restaurants. The potential for SoundHound's products is massive, as anything where a human talks to transmit information is a potential target for SoundHound AI's software. In addition to restaurants, some of the biggest target areas for SoundHound are automotive (digital assistants), finance, and healthcare. However, SoundHound has products for many other markets as well. There's a massive market for SoundHound AI's technology, but how is the company doing now? SoundHound's results back up its potential, as revenue increased a 151% year over year in the first quarter. Total revenue was only $29.1 million, which gives investors an idea of how relatively small SoundHound AI is. As should be expected for a rapidly growing and small company, SoundHound AI is deeply unprofitable. Still, I'm not docking any points for this, as it's wisely spending its resources to capture as much market share as possible. For the full year, management expects revenue of $157 million to $177 million, indicating 97% revenue growth from a year ago. That's an impressive figure that showcases the strong demand for SoundHound AI's product. SoundHound AI's growth is up to par for a stock of its stature, but it still has to trade at a reasonable valuation to be considered a buy. Because SoundHound AI is unprofitable, the only metric we have to value the stock is its price-to-sales (P/S) ratio. Normally, software companies trade between 10 and 20 times sales, but SoundHound AI is far more expensive. SOUN PS Ratio data by YCharts At 36 times sales, SoundHound AI is far more expensive than the normal P/S range for software stocks. However, it's also not common to see companies projecting that their revenue will double over the next year. Should SoundHound AI hit the middle range of its sales target ($167 million), it would be valued at 23.9 times projected 2025 sales. Once again, that's still not cheap. However, if SoundHound AI can deliver a 2026 that's similar in growth to 2025, then it could transform the stock into a rocket ship. With how small SoundHound AI's revenue base is and how wide a potential market it's tackling, this could easily happen. However, if it doesn't, the stock will likely crash due to high expectations already built into the stock price. Considering that, I don't think SoundHound AI is the best AI stock to buy in June. However, I think it's a solid pick as long as investors understand what they're getting into. SoundHound AI is a high-risk, high-reward stock. As a result, investors need to keep their position sizing in mind and likely devote no more than 1% of total portfolio value to SoundHound. That way, it can still provide meaningful results to your portfolio if it succeeds but won't harm it much if it declines significantly in value. Before you buy stock in SoundHound AI, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and SoundHound AI wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Keithen Drury 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. Is SoundHound AI the Top Artificial Intelligence Stock to Buy in June? was originally published by The Motley Fool Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
2 hours ago
- Yahoo
We Just Witnessed the S&P 500 Make History for the 7th Time in 75 Years -- and It Points to the Stock Market Soaring Over the Next 12 Months
The Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have all been violently whipsawed in recent months. Volatility-inducing variables, such as President Donald Trump's ever-changing tariff and trade policy, are unlikely to go away anytime soon. Outsize gains in May for the S&P 500 have historically correlated with big green arrows over the next year for investors. 10 stocks we like better than S&P 500 Index › For more than a century, Wall Street has been a wealth-creating machine for patient investors. Though other asset classes have enjoyed solid nominal gains, such as gold, oil, real estate, and Treasury bonds, nothing has come remotely close to the annualized return of stocks over the long run. But just because stocks have a knack for making long-term investors richer, it doesn't mean they move from Point A to B in a straight line. After the broad-based S&P 500 (SNPINDEX: ^GSPC) reached its all-time closing high in mid-February, the iconic Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500, and growth-fueled Nasdaq Composite (NASDAQINDEX: ^IXIC) went on a roller-coaster ride. The S&P 500 and Dow both fell into correction territory, with the Nasdaq Composite dipping into a full-fledged bear market. More specifically, the market witnessed two of the wildest moves in the benchmark S&P 500 during a one-week span. Between the closing bell on April 2 and April 4, the index suffered its fifth-worst two-day percentage decline in 75 years. This was followed by the largest nominal point gain for the S&P 500 since its inception on April 9. When volatility picks up on Wall Street, it's common for investors to look to the past for correlative events that might help forecast directional moves in the future. Even though no correlative event can, with guaranteed accuracy, predict what's to come, some events have near-perfect or perfect track records of forecasting future directional moves in the Dow Jones, S&P 500, and/or Nasdaq Composite. One of these rare events occurred in May for the benchmark S&P 500 -- and historical precedent suggests it might be all systems go for stocks over the next year. But before looking to the future, it's important to understand the past and how the current foundation has been laid. The volatility Wall Street has experienced over the last couple of months is unlikely to go away anytime soon. For the moment, it's being led by persistent tariff-related uncertainty. "Roller coaster" is perhaps the perfect descriptor of what President Donald Trump's tariff and trade policy has entailed since it was unveiled following the closing bell on April 2. Trump initially introduced a 10% global tariff, as well as higher "reciprocal tariff" rates that were targeted at dozens of countries that have, historically, maintained adverse trade imbalances with the U.S. Since this initial introduction, the president placed a 90-day pause on reciprocal tariffs on April 9 (the day the S&P 500 enjoyed its largest nominal point gain in its history) for all countries save China, then announced a reduction on most reciprocal tariffs with China in mid-May. In late May, a federal court ruled that Trump had exceeded his power by implementing duties by executive order, only to have an appeals court allow the tariffs to continue the following day. The only thing investors currently know about tariffs is that we have no clue what comes next. Between the federal appeal and the Trump administration changing its tune pretty consistently on which goods or countries are subject to tariffs, investor sentiment can shift at a moment's notice. Another big issue investors have been contending with is the historical priciness of equities. Even though "value" is a subjective term that's going to vary from one person to the next, there's little denying that stocks are pushing the envelope when it comes to their aggregate valuation. In December, the S&P 500's Shiller price-to-earnings (P/E) ratio (also known as the cyclically adjusted P/E ratio, or CAPE ratio) nearly reached 39, which is its third-highest reading during a continuous bull market when back-tested to January 1871 -- that's not a typo. Even after Wall Street's April swoon, stocks are at one of their priciest valuations in 154 years. There have been only a half-dozen occasions throughout history where the S&P 500's Shiller P/E has topped 30 and held that level for at least two months. The previous five instances all, eventually, resulted in the Dow, S&P 500, and/or Nasdaq losing 20% to 89% of their respective value. The other volatility-inducing issue is rapidly rising Treasury yields. While income investors are singing a happy tune, rapidly climbing long-dated bond yields signify the growing likelihood of a higher prevailing inflation rate creeping into the picture. This has the potential to weaken the U.S. growth rate. With a better understanding of the variables that have been whipsawing the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite in recent months, we can turn our attention back to the S&P 500's history-making moment in May. Though the month of May is often known for spring showers, the only thing raining on Wall Street was money for optimistic investors. The broad-based S&P 500 shrugged off tariff-related concerns and closed out the month with a gain of 6.2%. Dating back to 1950, this marked only the seventh time the S&P 500 had gained at least 5% in the month of May. What's of interest is what's happened following these outsize single-month gains for Wall Street's top health barometer. As you might expect, S&P 500 returns for the one- and three-month periods following a 5% or greater gain in May were relatively mixed over the prior six occurrences. The average one- and three-month returns were more or less on par with the historical one-month and three-month returns of the S&P 500 since 1950. But as Carson Group's Chief Market Strategist Ryan Detrick points out in a post on social media platform X (formerly Twitter), there's a sizable difference in average returns when looking out over the next 12 months. The S&P 500 has been higher 100% of the time one year after an advance of at least 5% in the index during May. What's more, the average annual return of 19.9% following a gain of at least 5% in May more than doubles the average annual return of 9.2% for the S&P 500, dating back to 1950. Based on what historical correlations indicate, the stock market has been given a green light to soar over the next year. Just as important, Detrick's data set points to the disparity between optimism and pessimism on Wall Street. For instance, stock market corrections and bear markets are normal, healthy, and inevitable aspects of the investing cycle. But as data from Bespoke Investment Group has shown, these downturns tend to be short-lived. According to Bespoke, the average S&P 500 bear market between the start of the Great Depression (September 1929) and June 2023 has lasted just 286 calendar days, or about 9.5 months. On the other hand, Bespoke Investment Group's calculations show that the typical S&P 500 bull market endured for 1,011 calendar days spanning 94 years. On average, bull markets last 3.5 times longer than the typical bear market. Being optimistic and relying on time as an ally has been a successful formula for investors spanning more than a century. Before you buy stock in S&P 500 Index, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and S&P 500 Index wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $674,395!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $858,011!* Now, it's worth noting Stock Advisor's total average return is 997% — a market-crushing outperformance compared to 172% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of June 2, 2025 Sean Williams 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. We Just Witnessed the S&P 500 Make History for the 7th Time in 75 Years -- and It Points to the Stock Market Soaring Over the Next 12 Months was originally published by The Motley Fool
Epoch Times
3 hours ago
- Epoch Times
Corruption Undermines Safety in China's Auto Industry: Insider
As China's automobile industry has rapidly developed and expanded into the international market in recent years, an industry insider has revealed to The Epoch Times that performance, safety, and durability issues in Chinese cars are rooted in systemic corruption within the Chinese communist regime. Huang Guocheng, a former automotive mechanical structural design engineer in Guangxi Province, joined a well-known Chinese auto company after graduating from university in 2004. He told The Epoch Times recently that Chinese auto companies generally focus their research and development on eye-catching elements—such as appearance, color, and interior trim—but place less emphasis on performance and safety.
