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Cencora Rallies 14.7% Year to Date: What's Driving the Stock?
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Cencora, Inc. (COR - Free Report) witnessed strong momentum in the year-to-date period. Shares of the company have rallied 14.7% compared with 2.8% growth of the industry. The S&P 500 Composite has risen 22.5% during the same time frame.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.
Chesterbrook, PA-based Cencora is one of the world’s largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce healthcare costs and improve patient outcomes. The company is well-positioned to deliver long-term sustainable growth on the back of its diverse and inclusive teams.
Image Source: Zacks Investment Research
Factors Favoring COR’s Growth
The rally in the company’s share price can be attributed to the robust growth in the company’s U.S. Healthcare Solutions segment. The optimism led by a solid third-quarter fiscal 2024 performance and robust business potential are expected to contribute further.
Cencora exited third-quarter fiscal 2024 with better-than-expected results. The company witnessed solid top-line and bottom-line performances in the reported quarter, which is likely to have aided in price growth.
Per management, Cencora delivered a solid performance by playing a crucial role in the healthcare system while maintaining efficiency throughout its business. The company focuses on strategic priorities and thoughtful capital deployment for long-term growth. The company’s strength in segmental performance due to growth in all markets and strong demand for specialty products, especially GLP-1 drugs, is likely to drive fourth-quarter sales higher.
COR has raised its revenue and earnings projections for fiscal 2024, which are also likely to have interested investors. For fiscal 2024, adjusted earnings per share (EPS) is now estimated to be in the range of $13.55-$13.65 (previously $13.35-$13.55), indicating growth of 13-13.8% from the prior-year level. Revenues are now projected to increase 12% compared with the previous guidance of 10-12%. The top line in the U.S. Healthcare Solutions segment is now expected to grow 12-13% (previously 11-13%). Revenues in the International Healthcare solutions business are now estimated to be up 4-6% (previously 4-7%).
Cencora is an ideal partner for manufacturers looking to launch their products because of its extensive worldwide distribution network and global platform of commercialization services. Due to its growing presence in the pharmaceutical industry, Cencora can establish partnerships with pharmaceutical companies at an early stage of product development and market itself as an integrated partner capable of assisting in the successful commercialization of its products in addition to providing logistics and distribution services. These factors are likely to have favored the stock’s growth.
Risk Factors
The company’s largest customer, Walgreens, accounted for a significant proportion of total revenues. The loss of any major customer will adversely impact the top line. Cencora extended its 10-year pharmaceutical distribution agreement with Walgreens Boot Alliance for three years. The contract will now expire in 2026. Hence, the possibility of a headwind in the near term remains.
A Look at Estimates
COR’s EPS for fiscal 2024 and 2025 are projected to grow 13.7% and 8.7%, respectively, to $13.63 and $14.82 on a year-over-year basis. The Zacks Consensus Estimate for EPS has expanded 7 cents for 2024, whereas it contracted 5 cents for 2025 in the past 60 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 11.6% and 6.4%, respectively, to $292.59 billion and $311.25 billion on a year-over-year basis.
Stocks to Consider
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Baxter International Inc. (BAX - Free Report) , and Boston Scientific Corporation (BSX - Free Report) .
DaVita, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 24.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have gained 116.4% compared with the industry’s 38.3% rise in the past year.
Baxter, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10%. BAX’s earnings surpassed estimates in each of the trailing four quarters, with the average being 3.7%.
Baxter has gained 15% compared with the industry’s 30.7% rise in the past year.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 7.2%.
Boston Scientific’s shares have rallied 74.7% compared with the industry’s 30.7% rise in the past year.
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Cencora Rallies 14.7% Year to Date: What's Driving the Stock?
Cencora, Inc. (COR - Free Report) witnessed strong momentum in the year-to-date period. Shares of the company have rallied 14.7% compared with 2.8% growth of the industry. The S&P 500 Composite has risen 22.5% during the same time frame.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.
Chesterbrook, PA-based Cencora is one of the world’s largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce healthcare costs and improve patient outcomes. The company is well-positioned to deliver long-term sustainable growth on the back of its diverse and inclusive teams.
Image Source: Zacks Investment Research
Factors Favoring COR’s Growth
The rally in the company’s share price can be attributed to the robust growth in the company’s U.S. Healthcare Solutions segment. The optimism led by a solid third-quarter fiscal 2024 performance and robust business potential are expected to contribute further.
Cencora exited third-quarter fiscal 2024 with better-than-expected results. The company witnessed solid top-line and bottom-line performances in the reported quarter, which is likely to have aided in price growth.
Per management, Cencora delivered a solid performance by playing a crucial role in the healthcare system while maintaining efficiency throughout its business. The company focuses on strategic priorities and thoughtful capital deployment for long-term growth. The company’s strength in segmental performance due to growth in all markets and strong demand for specialty products, especially GLP-1 drugs, is likely to drive fourth-quarter sales higher.
COR has raised its revenue and earnings projections for fiscal 2024, which are also likely to have interested investors. For fiscal 2024, adjusted earnings per share (EPS) is now estimated to be in the range of $13.55-$13.65 (previously $13.35-$13.55), indicating growth of 13-13.8% from the prior-year level. Revenues are now projected to increase 12% compared with the previous guidance of 10-12%. The top line in the U.S. Healthcare Solutions segment is now expected to grow 12-13% (previously 11-13%). Revenues in the International Healthcare solutions business are now estimated to be up 4-6% (previously 4-7%).
Cencora is an ideal partner for manufacturers looking to launch their products because of its extensive worldwide distribution network and global platform of commercialization services. Due to its growing presence in the pharmaceutical industry, Cencora can establish partnerships with pharmaceutical companies at an early stage of product development and market itself as an integrated partner capable of assisting in the successful commercialization of its products in addition to providing logistics and distribution services. These factors are likely to have favored the stock’s growth.
Risk Factors
The company’s largest customer, Walgreens, accounted for a significant proportion of total revenues. The loss of any major customer will adversely impact the top line. Cencora extended its 10-year pharmaceutical distribution agreement with Walgreens Boot Alliance for three years. The contract will now expire in 2026. Hence, the possibility of a headwind in the near term remains.
A Look at Estimates
COR’s EPS for fiscal 2024 and 2025 are projected to grow 13.7% and 8.7%, respectively, to $13.63 and $14.82 on a year-over-year basis. The Zacks Consensus Estimate for EPS has expanded 7 cents for 2024, whereas it contracted 5 cents for 2025 in the past 60 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 11.6% and 6.4%, respectively, to $292.59 billion and $311.25 billion on a year-over-year basis.
Stocks to Consider
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Baxter International Inc. (BAX - Free Report) , and Boston Scientific Corporation (BSX - Free Report) .
DaVita, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 17.5%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 24.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have gained 116.4% compared with the industry’s 38.3% rise in the past year.
Baxter, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 10%. BAX’s earnings surpassed estimates in each of the trailing four quarters, with the average being 3.7%.
Baxter has gained 15% compared with the industry’s 30.7% rise in the past year.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.6%. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 7.2%.
Boston Scientific’s shares have rallied 74.7% compared with the industry’s 30.7% rise in the past year.