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AmerisourceBergen Corporation (ABC - Analyst Report) is scheduled to report third quarter fiscal 2013 results (ended Mar 31, 2013) before the opening bell on Jul 24, 2013.

AmerisourceBergen, one of the world’s largest pharmaceutical services companies, has delivered positive earnings surprises in two of the last four quarters with an average beat of 1.19%. Last quarter, earnings at AmerisourceBergen missed the Zacks Consensus Estimate by 2 cents.  Let’s see how things are shaping up this quarter. 

Factors at Play

Revenues grew 4.1% to $20.5 billion in the second quarter of fiscal 2013, primarily driven by the growth of pharmaceutical distribution segment. 

AmerisourceBergen struck a 10-year deal with Walgreen Co. (WAG - Analyst Report) in Mar 2013, which is expected to add approximately $2 billion to top line in fiscal 2013 and approximately $25 billion in 2014. We believe that the Walgreens deal is a positive for the company. Meanwhile, in order to streamline its operations, the company sold its Canadian pharmaceutical distribution business, which was facing tough market conditions for generics. Additionally, AmerisourceBergen also sold AndersonBrecon, its contract pharmaceutical packaging business in the US and the UK.

Weakness in the oncology business due to challenging reimbursement rates and soft World Courier business continue to be a matter of concern. 

Earnings Whispers?

Our proven model does not conclusively show that AmerisourceBergen will beat earnings this quarter. That is because a stock needs to have both a positive Earnings ESP (Read:ZACKS EARNINGS ESP: A BETTER METHOD) and a Zacks Rank #1, #2 or #3 to be able to beat Zacks Consensus Estimates. That is not the case here as you will see below.

Zacks ESP: The ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate currently stand at 74 cents.

Zacks Rank #3 (Hold): AmerisourceBergen’s Zacks Rank #3 (Hold) when combined with a 0.00% ESP makes surprise prediction difficult.

We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions momentum.

Other Stocks to Consider

Here are some other companies you may want to consider as our model shows that they have the right combination of elements to post an earnings beat this quarter: 

Biogen Idec. (BIIB - Analyst Report) has Earnings ESP of +2.19% and holds a Zacks Rank #3. Biogen will be reporting second quarter earnings on Jul 25 before the market opens. 

Forest Labs has Earnings ESP of 14.29% and holds a Zacks Rank #3.

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