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Owens & Minor closed at $10 today which is 13.5X trailing eps and 11.5X Dec FY est. DLJ projecting 17% growth and SB 15%. Stephens sez BUY with $19 target price. SB opin is 1H. Value Line gives it a 2 for timeliness, 2 for technical and 3 for safety. I say it has an exceptional risk/reward profile from $10.

Q1 EPS in line with expectations. OMI stock from $18 to $11 last May when announce loss of Columbia [ COL ] contract as of 10/1. $320M annual revs for $3B rev co. Signings since then worth $360M per yr, the biggest being Tenet [ THC ] for $250M per yr, began in Feb. Modeling the FY looks like Q2 revs flat/down [ COL ] but EPS +10% area [ COL deal not very profitable? ]. Easy comps 2H with Q3 rev flat/up and EPS +>15%, Q4 revs +15% area and eps +>20%. Comps easy 1H 2,000 also.

OMI is a distributor of health care products to health care providers. This is a consolidating industry. Cardinal Health [ CAH ] has been the most active I think. CAH revs up to $17B and trades over 30X trailing. McKesson HBO [ MCK ] won't be doing any more acqs for a while, but they are over $25B revs. Bergen Brunswig [ BBC ] rev base is over $18B. I bet all three of these have considered going after OMI and have probably contacted them. I doubt OMI will be around for long. So a takeout is the positive surprise potential and provides the downside support should earnings stumble in this low margin business.

Mgmt own over 5% of shares and that ownership is well dispersed. 1997 they put into effect minimum share ownership requirements to be achieved by 2,002. Nothing but insider buying and lately in the $12 area.

$20 Target price is < 10X projected cash flow for this year [ depressed results ] and about 22X this years $0.90 est.

I tried to call co but mgmt at shareholders meeting where they increased div.
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