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AmerisourceBergen (ABC - Analyst Report) is set to report second quarter 2013 results on Apr 25, 2013. Last quarter, the company reported in-line results for the first quarter. Let’s see how things are shaping up for this announcement.

Factors at Play

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 2.91%. Revenues in the fourth quarter grew 5.7% year over year primarily driven by the pharmaceutical distribution segment. Growth in the last quarter was positively impacted by increase in third party logistics, blood products, and vaccine and physician office distribution business at AmerisourceBergen.

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. Meanwhile, in order to streamline its operations, the company decided to sell its Canadian pharmaceutical distribution business, which was facing tough market conditions for generics. Additionally, AmerisourceBergen also agreed to sell AndersonBrecon – its contract pharmaceutical packaging business in the US and the UK.  We are positive on the recent divestitures along with the deal with Walgreens, which we believe should positively impact results.

Earnings Whispers?

However, 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 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 Zacks Consensus Estimate currently stand at 88 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:

Eli Lilly and Company ( (LLY - Analyst Report) ) Earnings ESP of +2.86% and a Zacks Rank #3.

Novartis (NVS - Analyst Report) Earnings ESP of +0.80% and a Zacks Rank #3.
 

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