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Reasons to Retain Cencora (COR) Stock in Your Portfolio for Now
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Cencora, Inc. (COR - Free Report) is well-poised for growth on the back of robust U.S. Healthcare Solutions business and product launches. However, intense competition is a concern.
Shares of this currently Zacks Rank #3 (Hold) company have risen 20.5% year to date against the industry’s 11% decline. The S&P 500 Index has risen 19.7% in the same time frame.
Cencora is one of the world’s largest pharmaceutical service companies, focused on providing drug distribution and related services to reduce healthcare costs and improve patient outcomes. The company has a market capitalization of $40.37 billion. It changed its name from AmerisourceBergen to Cencora (on Aug 30) and its ticker from ABC to COR.
Image Source: Zacks Investment Research
COR’s bottom line is anticipated to improve 8.9% over the next five years. Its earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 3.88%.
What’s Driving Growth?
In fiscal 2022, COR realigned its reporting structure under two segments — U.S. Healthcare Solutions and International Healthcare Solutions.
The first segment comprises the legacy Pharmaceutical Distribution Services (excluding Proforma), MWI Animal Health, Xcenda, Lash Group and ICS 3PL. It benefits from an increasing volume and expanding customer base.
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 favor the segment in the coming quarters.
In the third quarter of fiscal 2023, revenues at U.S. Healthcare Solutions totaled $61.9 billion, up 13% year over year. This improvement was due to overall market growth and increased specialty product sales. High demand for the recently approved GLP-1 drugs for diabetes and/or weight loss has helped accelerate growth during the quarter.
Segmental operating income amounted to $632.8 million, up 9.4% year over year.
Higher gross profit (including fees earned from the distribution of government-owned COVID-19 treatments and a gross profit on sales from specialty physician practices) contributed to the upside.
Revenues at the U.S. Healthcare Solutions segment are expected to grow 7-10% in fiscal 2024. Operating income is anticipated to increase 4-7%.
PharmaLex is a leading provider of specialized services for the life sciences industry, owned by funds advised by AUCTUS Capital Partners AG. It has a significant footprint in Europe and the United States, and a growing presence in other parts of the world.
The acquisition of this Germany-based company in January to support manufacturer partners in the pharmaceutical development and commercialization journey should bring in additional revenues during the soon-to-be-reported quarter.
Adjusted EPS for fiscal 2024 is estimated between $12.70 and $13.00, implying a 6-8.4% increase from the previous year’s level. COR estimates revenue growth of 7-10% for the same time frame.
What’s Hurting the Stock?
Cencora operates in a highly competitive pharmaceutical distribution and related healthcare services market. The generic industry is facing consolidation of customers and manufacturers, global competitors and regulatory challenges.
The company encounters additional competition from manufacturers, chain drugstores, specialty distributors, and packaging and healthcare technology companies. The increasing competition is likely to affect its business.
Estimate Trend
COR has been witnessing a positive estimate revision trend for fiscal 2024. In the past 60 days, the Zacks Consensus Estimate for earnings has increased from $12.82 per share to $12.88.
The consensus mark for first-quarter fiscal 2024 revenues is pegged at $68.45 billion, indicating an 8.9% improvement from the year-ago quarter’s reported actual. The bottom-line estimate is pinned at $2.85, implying year-over-year growth of 5.2%.
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 33.2% year to date compared with the industry’s 2.6% growth.
Biodesix, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 9.76%.
Biodesix’s shares have lost 35.2% year to date compared with the industry’s 11% decline.
Integer Holdings, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 30.4% year to date against the industry’s 5.4% decline.
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Reasons to Retain Cencora (COR) Stock in Your Portfolio for Now
Cencora, Inc. (COR - Free Report) is well-poised for growth on the back of robust U.S. Healthcare Solutions business and product launches. However, intense competition is a concern.
Shares of this currently Zacks Rank #3 (Hold) company have risen 20.5% year to date against the industry’s 11% decline. The S&P 500 Index has risen 19.7% in the same time frame.
Cencora is one of the world’s largest pharmaceutical service companies, focused on providing drug distribution and related services to reduce healthcare costs and improve patient outcomes. The company has a market capitalization of $40.37 billion. It changed its name from AmerisourceBergen to Cencora (on Aug 30) and its ticker from ABC to COR.
Image Source: Zacks Investment Research
COR’s bottom line is anticipated to improve 8.9% over the next five years. Its earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 3.88%.
What’s Driving Growth?
In fiscal 2022, COR realigned its reporting structure under two segments — U.S. Healthcare Solutions and International Healthcare Solutions.
The first segment comprises the legacy Pharmaceutical Distribution Services (excluding Proforma), MWI Animal Health, Xcenda, Lash Group and ICS 3PL. It benefits from an increasing volume and expanding customer base.
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 favor the segment in the coming quarters.
In the third quarter of fiscal 2023, revenues at U.S. Healthcare Solutions totaled $61.9 billion, up 13% year over year. This improvement was due to overall market growth and increased specialty product sales. High demand for the recently approved GLP-1 drugs for diabetes and/or weight loss has helped accelerate growth during the quarter.
Segmental operating income amounted to $632.8 million, up 9.4% year over year.
Higher gross profit (including fees earned from the distribution of government-owned COVID-19 treatments and a gross profit on sales from specialty physician practices) contributed to the upside.
Revenues at the U.S. Healthcare Solutions segment are expected to grow 7-10% in fiscal 2024. Operating income is anticipated to increase 4-7%.
PharmaLex is a leading provider of specialized services for the life sciences industry, owned by funds advised by AUCTUS Capital Partners AG. It has a significant footprint in Europe and the United States, and a growing presence in other parts of the world.
The acquisition of this Germany-based company in January to support manufacturer partners in the pharmaceutical development and commercialization journey should bring in additional revenues during the soon-to-be-reported quarter.
Adjusted EPS for fiscal 2024 is estimated between $12.70 and $13.00, implying a 6-8.4% increase from the previous year’s level. COR estimates revenue growth of 7-10% for the same time frame.
What’s Hurting the Stock?
Cencora operates in a highly competitive pharmaceutical distribution and related healthcare services market. The generic industry is facing consolidation of customers and manufacturers, global competitors and regulatory challenges.
The company encounters additional competition from manufacturers, chain drugstores, specialty distributors, and packaging and healthcare technology companies. The increasing competition is likely to affect its business.
Estimate Trend
COR has been witnessing a positive estimate revision trend for fiscal 2024. In the past 60 days, the Zacks Consensus Estimate for earnings has increased from $12.82 per share to $12.88.
The consensus mark for first-quarter fiscal 2024 revenues is pegged at $68.45 billion, indicating an 8.9% improvement from the year-ago quarter’s reported actual. The bottom-line estimate is pinned at $2.85, implying year-over-year growth of 5.2%.
Cencora, Inc. Price
Cencora, Inc. price | Cencora, Inc. Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 33.2% year to date compared with the industry’s 2.6% growth.
Biodesix, carrying a Zacks Rank of 2 at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 9.76%.
Biodesix’s shares have lost 35.2% year to date compared with the industry’s 11% decline.
Integer Holdings, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 30.4% year to date against the industry’s 5.4% decline.