OSI Systems (NASDAQ:OSIS) Announces Quarterly Earnings Results, Beats Estimates By $0.01 EPS

Key Points

• OSI Systems posted record quarterly results, with revenue of $403.5 million and adjusted EPS of $1.66, exceeding estimates by $0.01. Revenue rose 5% year over year, while bookings drove a record $2.1 billion backlog.
• Security and Optoelectronics/Manufacturing delivered strong growth, supported by government and defense demand. However, Healthcare revenue fell 14% amid constrained hospital capital spending, pushing the division to a negative adjusted operating margin and weighing on consolidated gross margin.
• Management reaffirmed fiscal 2027 revenue guidance of $1.875 billion–$1.930 billion and raised non-GAAP EPS guidance to $11.28–$11.64, primarily due to share repurchases. Shares rose 3.7% following the results, while analysts maintained a “Moderate Buy” consensus rating.

OSI Systems (NASDAQ:OSIS - Get Free Report) released its quarterly earnings data on Thursday. The technology company reported $1.66 earnings per share for the quarter, beating the consensus estimate of $1.65 by $0.01, FiscalAI reports. OSI Systems had a return on equity of 20.33% and a net margin of 8.66%. The firm had revenue of $403.47 million during the quarter, compared to the consensus estimate of $396.11 million.

Here are the key takeaways from OSI Systems' conference call:

• Record first-quarter results included revenue of $403 million, up 5% year over year, adjusted EPS of $1.66, up 17%, and operating cash flow of $37 million. Bookings produced a 1.4 book-to-bill ratio, lifting backlog to a record $2.1 billion.
• Security demand remained strong despite Middle East-related disruption, supported by new U.S. Customs and Border Protection contract vehicles, continued RF bookings, and a growing pipeline tied to homeland defense and Golden Dome-related initiatives.
• Optoelectronics and Manufacturing revenue rose 9% including intercompany sales and 16% with third-party customers, while operating margins expanded. Management also expects Security service revenue to accelerate to strong double-digit growth, supporting margin expansion over time.
• Healthcare revenue declined 14% as hospitals constrained capital spending, resulting in a -1.8% adjusted operating margin for the division. Consolidated gross margin fell to 30.7% from 32.0% due to Healthcare weakness and unfavorable business mix.
• Fiscal 2027 revenue guidance was reaffirmed at $1.875 billion to $1.930 billion, with growth expected to be weighted toward the second half; second-quarter revenue is expected to decline modestly year over year due to difficult Middle East comparisons and the Mexico program transition. Non-GAAP EPS guidance was raised to $11.28-$11.64, primarily reflecting the benefit of share repurchases.

OSI Systems Stock Up 3.7%

OSIS traded up $7.50 on Thursday, reaching $208.17. The company's stock had a trading volume of 366,737 shares, compared to its average volume of 264,271. OSI Systems has a 1 year low of $186.50 and a 1 year high of $311.72. The business's 50 day moving average is $200.76 and its 200 day moving average is $238.44. The company has a debt-to-equity ratio of 1.20, a current ratio of 3.15 and a quick ratio of 2.34. The stock has a market cap of $3.32 billion, a price-to-earnings ratio of 23.13, a price-to-earnings-growth ratio of 1.49 and a beta of 1.21.

Analyst Ratings Changes

OSIS has been the subject of several analyst reports. Bank of America cut their price target on OSI Systems from $315.00 to $300.00 and set a "buy" rating for the company in a report on Monday, July 20th. Oppenheimer lowered their price objective on OSI Systems from $300.00 to $265.00 and set an "outperform" rating for the company in a research report on Thursday, October 8th. Roth Capital reiterated a "buy" rating and issued a $274.00 target price on shares of OSI Systems in a research note on Friday, August 21st. B. Riley Financial reiterated a "buy" rating and set a $265.00 target price (down from $320.00) on shares of OSI Systems in a research report on Friday, August 21st. Finally, Weiss Ratings reaffirmed a "hold (c+)" rating on shares of OSI Systems in a research note on Wednesday. Five equities research analysts have rated the stock with a Buy rating and two have issued a Hold rating to the company. Based on data from MarketBeat.com, the company presently has an average rating of "Moderate Buy" and a consensus target price of $276.71.

About OSI Systems

OSI Systems, Inc is a vertically integrated technology company that designs and manufactures specialized electronic systems and components for security, healthcare and aerospace and defense applications. Headquartered in Hawthorne, California, the company serves government agencies, transportation authorities, hospitals and commercial customers in the United States and international markets.

Through its security division, OSI Systems provides inspection and screening systems used at airports, borders, ports and other facilities.

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