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Reasons to Add Cencora (COR) Stock in Your Portfolio 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 #2 (Buy) company have risen 18.2% year to date compared with the industry’s 5.8% increase. The S&P 500 Index has risen 9.3% 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 $48.29 billion.
Image Source: Zacks Investment Research
COR’s bottom line is anticipated to improve 9.8% over the next five years. Its earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 6.69%.
What’s Driving Growth?
COR currently reports 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 first quarter of fiscal 2024, revenues at U.S. Healthcare Solutions totaled $65.2 billion, up 15.9% 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 $698.1 million, up 22% 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 11-13% for fiscal 2024 compared with 7-10% earlier. Operating income is anticipated to increase 9-11% compared with the previous expectation of 4-7%.
Also, Cencora is expected to benefit from generics growth in the long run, raising investors’ optimism. It 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 aid it. Moreover, the company’s focus on specialty drugs bodes well.
Adjusted EPS for fiscal 2024 is estimated between $13.25 and $13.50, implying a 6-8.4% increase from the previous year’s level. The company previously expected earnings to lie between $12.70 and $13.00. COR estimates revenue growth of 10-12% year over year.
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 $12.88 per share to $13.43.
The consensus mark for second-quarter fiscal 2024 revenues is pegged at $70.35 billion, indicating a 10.9% improvement from the year-ago quarter’s reported actual. The bottom-line estimate is pinned at $3.65, implying year-over-year growth of 4.3%.
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.57%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 29.1% year to date compared with the industry’s 6.7% growth.
Medpace, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 18%. MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.42%.
Medpace’s shares have rallied 31.4% year to date compared with the industry’s 5.7% growth.
Biodesix, carrying a Zacks Rank #2 at present, has an estimated growth rate of 29% for 2024. BDSX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 13.96%.
Biodesix’s shares have lost 21.2% year to date against the industry’s 5.7% growth.
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Reasons to Add Cencora (COR) Stock in Your Portfolio 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 #2 (Buy) company have risen 18.2% year to date compared with the industry’s 5.8% increase. The S&P 500 Index has risen 9.3% 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 $48.29 billion.
Image Source: Zacks Investment Research
COR’s bottom line is anticipated to improve 9.8% over the next five years. Its earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 6.69%.
What’s Driving Growth?
COR currently reports 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 first quarter of fiscal 2024, revenues at U.S. Healthcare Solutions totaled $65.2 billion, up 15.9% 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 $698.1 million, up 22% 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 11-13% for fiscal 2024 compared with 7-10% earlier. Operating income is anticipated to increase 9-11% compared with the previous expectation of 4-7%.
Also, Cencora is expected to benefit from generics growth in the long run, raising investors’ optimism. It 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 aid it. Moreover, the company’s focus on specialty drugs bodes well.
Adjusted EPS for fiscal 2024 is estimated between $13.25 and $13.50, implying a 6-8.4% increase from the previous year’s level. The company previously expected earnings to lie between $12.70 and $13.00. COR estimates revenue growth of 10-12% year over year.
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 $12.88 per share to $13.43.
The consensus mark for second-quarter fiscal 2024 revenues is pegged at $70.35 billion, indicating a 10.9% improvement from the year-ago quarter’s reported actual. The bottom-line estimate is pinned at $3.65, implying year-over-year growth of 4.3%.
Cencora, Inc. Price
Cencora, Inc. price | Cencora, Inc. Quote
Other Stocks to Consider
Some other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Medpace (MEDP - Free Report) and Biodesix (BDSX - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.57%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 29.1% year to date compared with the industry’s 6.7% growth.
Medpace, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 18%. MEDP’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.42%.
Medpace’s shares have rallied 31.4% year to date compared with the industry’s 5.7% growth.
Biodesix, carrying a Zacks Rank #2 at present, has an estimated growth rate of 29% for 2024. BDSX’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 13.96%.
Biodesix’s shares have lost 21.2% year to date against the industry’s 5.7% growth.