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AmerisourceBergen Corporation (ABC - Analyst Report) is scheduled to report fourth quarter fiscal 2013 results (ended Sep 30, 2013) before the opening bell on Oct 31, 2013.

AmerisourceBergen, one of the world’s largest pharmaceutical services companies, has missed expectations in two of the last four quarters with an average miss of 0.71%.  Let’s see how things are shaping up this quarter.

Factors at Play

Safety issues surrounding the use of certain anemia drugs, especially those used in oncology have negatively affected the company’s revenue growth rate. Further, reduction in sales, restrictions on the use of anemia drugs or a decrease in Medicare reimbursement rates of these drugs could result in reduced growth or lower revenues.

The company expects a further slowdown in the business as the oncology business continues to face challenges due to a decline in reimbursement rates, migration of business to the hospital setting, and branded generic conversions.

Hence, results might be under pressure in the fourth quarter. Nevertheless, we are positive on AmerisourceBergen’s 10-year deal with Walgreen Co. (WAG - Analyst Report) signed in Mar 2013. AmerisourceBergen expects the deal to add $0.20 to the bottom line in 2014.

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 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.

Negative Zacks ESP: The ESP, which represents the difference between the Most Accurate estimate and the Zacks Consensus Estimate, is -1.35%. This is because both the Most Accurate Estimate and the Zacks Consensus Estimate currently stand at 73 cents and 74 cents, respectively.

Zacks Rank #3 (Hold): AmerisourceBergen’s Zacks Rank #3 (Hold) when combined with a negative 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:

Regeneron Pharmaceuticals, Inc. (REGN - Analyst Report) has Earnings ESP of +10.10% and carries a Zacks Rank #3.

Endo Health Solutions Inc. (ENDP - Analyst Report) has Earnings ESP of +0.89% and carries a Zacks Rank #3.

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