We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Invest in AmerisourceBergen (ABC) Stock
Read MoreHide Full Article
AmerisourceBergen Corporation is well-poised for growth on the back of its robust pharmaceutical distribution business and prudent acquisitions.
Shares of the Zacks Rank #2 (Buy) company have gained 21.4%, compared with the industry’s growth of 9.5% on a year-to-date basis. The S&P 500 Index has rallied 15.7% in the same time frame.
AmerisourceBergen — with a market capitalization of $24.65 billion — is one of the world’s largest pharmaceutical services companies, which is focused on providing drug distribution and related services to reduce health care costs and improve patient outcomes. It anticipates earnings to improve 11.3% over the next five years. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 5.4%.
Key Catalysts
Pharmaceutical Distribution serves healthcare providers in the pharmaceutical supply channel. AmerisourceBergen has been witnessing strong revenue growth in this unit in the last couple of quarters. Increasing volume and an expanding customer base have been driving the segment. Strong organic growth rates in the U.S. pharmaceutical market, improving patient access to medical care, enhanced economic conditions and population demographics are likely to continue benefiting the segment in the quarters ahead.
In fiscal third-quarter 2021, revenues in the segment totaled $49.31 billion, up 13.2% on a year-over-year basis. The upside can be attributed to increase in specialty product sales, including COVID-19 treatments and overall market growth. Segmental operating income was $483.9 million, up 13.4% year over year. Solid performance across the company’s distribution businesses, which include higher sales of specialty products, contributed to the upsurge.
Image Source: Zacks Investment Research
AmerisourceBergen has been actively pursuing acquisitions to strengthen its core areas. In January 2021, the company inked a strategic deal with Walgreens Boots Alliance to acquire the majority of the latter’s Alliance Healthcare business for around $6.5 billion, which comprises $6.275 billion in cash and 2 million shares of AmerisourceBergen common stock.
In June, the company closed this buyout, which will provide a boost to AmerisourceBergen’s platform. This, in turn, will help the platform deliver sustained growth throughout pharmaceutical distribution and manufacturer services. The deal will offer expanded scale and added services that will enable the combined business to better support pharmaceutical innovation through a global presence of broad leadership and local expertise.
Estimates Trend
AmerisourceBergen has been witnessing an upward estimate revision trend for fiscal 2021. In the past 60 days, the Zacks Consensus Estimate for its earnings has moved north by 1.3% to $9.24.
The Zacks Consensus Estimate for fiscal fourth-quarter 2021 revenues is pegged at $56.69 billion, suggesting growth of 15.1% from the year-ago reported number.
Image: Bigstock
Here's Why You Should Invest in AmerisourceBergen (ABC) Stock
AmerisourceBergen Corporation is well-poised for growth on the back of its robust pharmaceutical distribution business and prudent acquisitions.
Shares of the Zacks Rank #2 (Buy) company have gained 21.4%, compared with the industry’s growth of 9.5% on a year-to-date basis. The S&P 500 Index has rallied 15.7% in the same time frame.
AmerisourceBergen — with a market capitalization of $24.65 billion — is one of the world’s largest pharmaceutical services companies, which is focused on providing drug distribution and related services to reduce health care costs and improve patient outcomes. It anticipates earnings to improve 11.3% over the next five years. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 5.4%.
Key Catalysts
Pharmaceutical Distribution serves healthcare providers in the pharmaceutical supply channel. AmerisourceBergen has been witnessing strong revenue growth in this unit in the last couple of quarters. Increasing volume and an expanding customer base have been driving the segment. Strong organic growth rates in the U.S. pharmaceutical market, improving patient access to medical care, enhanced economic conditions and population demographics are likely to continue benefiting the segment in the quarters ahead.
In fiscal third-quarter 2021, revenues in the segment totaled $49.31 billion, up 13.2% on a year-over-year basis. The upside can be attributed to increase in specialty product sales, including COVID-19 treatments and overall market growth. Segmental operating income was $483.9 million, up 13.4% year over year. Solid performance across the company’s distribution businesses, which include higher sales of specialty products, contributed to the upsurge.
AmerisourceBergen has been actively pursuing acquisitions to strengthen its core areas. In January 2021, the company inked a strategic deal with Walgreens Boots Alliance to acquire the majority of the latter’s Alliance Healthcare business for around $6.5 billion, which comprises $6.275 billion in cash and 2 million shares of AmerisourceBergen common stock.
In June, the company closed this buyout, which will provide a boost to AmerisourceBergen’s platform. This, in turn, will help the platform deliver sustained growth throughout pharmaceutical distribution and manufacturer services. The deal will offer expanded scale and added services that will enable the combined business to better support pharmaceutical innovation through a global presence of broad leadership and local expertise.
Estimates Trend
AmerisourceBergen has been witnessing an upward estimate revision trend for fiscal 2021. In the past 60 days, the Zacks Consensus Estimate for its earnings has moved north by 1.3% to $9.24.
The Zacks Consensus Estimate for fiscal fourth-quarter 2021 revenues is pegged at $56.69 billion, suggesting growth of 15.1% from the year-ago reported number.
Other Stocks to Consider
Some other top-ranked stocks from the broader medical space are West Pharmaceutical Services, Inc. (WST - Free Report) , McKesson Corporation (MCK - Free Report) and Patterson Companies, Inc. (PDCO - Free Report) , each currently carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
West Pharmaceutical’s long-term earnings growth rate is estimated at 27.3%.
McKesson’s long-term earnings growth rate is estimated at 7.5%.
Patterson Companies’ long-term earnings growth rate is projected at 9.6%.