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Cencora (COR) Hits 52-Week High: What's Driving the Stock?
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Shares of Cencora, Inc. (COR - Free Report) scaled a new 52-week high of $240.86 on Mar 18, 2024, before closing the session slightly lower at $239.31.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 55.5% compared with a 5.9% rise of the industry and the S&P 500’s 30.4% growth.
Over the past five years, the company registered earnings growth of 13% compared with the industry’s 8.9% rise. The company’s long-term expected growth rate of 9.8% compares with the industry’s growth projection of 16.2%. Cencora’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 6.7%.
Cencora is witnessing an upward trend in its stock price, prompted by its strength in the U.S. Healthcare Solutions business. The optimism led by a solid first-quarter fiscal 2024 performance and generics and new product launches are expected to contribute further. However, stiff competition and concerns regarding contract renewals persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
Generics and New Product Launches: Cencora is expected to benefit from generics growth in the long run, raising investors’ optimism. Cencora is well-positioned to help ensure products get to market as efficiently as possible. Strong organic growth rates in the U.S. pharmaceutical market, improving patient access to care, improved economic conditions and population demographics, introduction of new innovative drugs like hepatitis C drugs, and a continued good brand pricing environment should drive growth. Moreover, the company’s focus on specialty drugs has boded well.
Strength in U.S. Healthcare Solutions Business: The U.S. Healthcare Solutions reportable segment distributes a comprehensive offering of brand-name, specialty brand-name and generic pharmaceuticals, among others. The U.S. Healthcare Solutions reportable segment also provides pharmaceutical distribution and additional services to physicians who specialize in a variety of disease states, especially oncology. Through its animal health business, the U.S. Healthcare Solutions reportable segment sells pharmaceuticals, vaccines, parasiticides and various other products to customers in both the companion animal and production animal markets.
In fourth-quarter fiscal 2024, revenues in this segment were driven by unit volume growth, including increased sales of products labeled for diabetes and weight loss in the GLP-1 class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines.
Strong Q1 Results: Cencora’s impressive first-quarter fiscal 2024 results buoy optimism. The company’s strong overall revenues and segmental performance were encouraging. The company recorded increased sales in its European distribution business and Canadian business, which drove its International Healthcare Solutions segment. Management’s focus on executing Cencora’s pharmaceutical-centric strategy and capturing opportunities through its robust capabilities also look promising.
Downsides
Contract Renewals: Cencora’s largest customer, Walgreens, accounted for a significant proportion of total revenues. The loss of any major customer will adversely impact the top line.
Stiff Competition: Cencora operates in a highly competitive pharmaceutical distribution and related healthcare services market. The generic industry is facing consolidation of customers and manufacturers, globalization and increasing quality and regulatory challenges.
Other Key Picks
A few other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Elevance Health, Inc. (ELV - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 75.7% compared with the industry’s 24.3% rise in the past year.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 54.9% compared with the industry’s 15.7% rise in the past year.
Elevance Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.1%.
Elevance Health’s shares have rallied 9.5% compared with the industry’s 5.9% rise in the past year.
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Cencora (COR) Hits 52-Week High: What's Driving the Stock?
Shares of Cencora, Inc. (COR - Free Report) scaled a new 52-week high of $240.86 on Mar 18, 2024, before closing the session slightly lower at $239.31.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 55.5% compared with a 5.9% rise of the industry and the S&P 500’s 30.4% growth.
Over the past five years, the company registered earnings growth of 13% compared with the industry’s 8.9% rise. The company’s long-term expected growth rate of 9.8% compares with the industry’s growth projection of 16.2%. Cencora’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 6.7%.
Cencora is witnessing an upward trend in its stock price, prompted by its strength in the U.S. Healthcare Solutions business. The optimism led by a solid first-quarter fiscal 2024 performance and generics and new product launches are expected to contribute further. However, stiff competition and concerns regarding contract renewals persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
Generics and New Product Launches: Cencora is expected to benefit from generics growth in the long run, raising investors’ optimism. Cencora is well-positioned to help ensure products get to market as efficiently as possible. Strong organic growth rates in the U.S. pharmaceutical market, improving patient access to care, improved economic conditions and population demographics, introduction of new innovative drugs like hepatitis C drugs, and a continued good brand pricing environment should drive growth. Moreover, the company’s focus on specialty drugs has boded well.
Strength in U.S. Healthcare Solutions Business: The U.S. Healthcare Solutions reportable segment distributes a comprehensive offering of brand-name, specialty brand-name and generic pharmaceuticals, among others. The U.S. Healthcare Solutions reportable segment also provides pharmaceutical distribution and additional services to physicians who specialize in a variety of disease states, especially oncology. Through its animal health business, the U.S. Healthcare Solutions reportable segment sells pharmaceuticals, vaccines, parasiticides and various other products to customers in both the companion animal and production animal markets.
In fourth-quarter fiscal 2024, revenues in this segment were driven by unit volume growth, including increased sales of products labeled for diabetes and weight loss in the GLP-1 class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines.
Strong Q1 Results: Cencora’s impressive first-quarter fiscal 2024 results buoy optimism. The company’s strong overall revenues and segmental performance were encouraging. The company recorded increased sales in its European distribution business and Canadian business, which drove its International Healthcare Solutions segment. Management’s focus on executing Cencora’s pharmaceutical-centric strategy and capturing opportunities through its robust capabilities also look promising.
Downsides
Contract Renewals: Cencora’s largest customer, Walgreens, accounted for a significant proportion of total revenues. The loss of any major customer will adversely impact the top line.
Stiff Competition: Cencora operates in a highly competitive pharmaceutical distribution and related healthcare services market. The generic industry is facing consolidation of customers and manufacturers, globalization and increasing quality and regulatory challenges.
Other Key Picks
A few other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Elevance Health, Inc. (ELV - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 75.7% compared with the industry’s 24.3% rise in the past year.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 14.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average being 15.6%.
Cardinal Health has gained 54.9% compared with the industry’s 15.7% rise in the past year.
Elevance Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12%. ELV’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.1%.
Elevance Health’s shares have rallied 9.5% compared with the industry’s 5.9% rise in the past year.