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Shares of AmerisourceBergen Corporation scaled a new 52-week high of $163.81 on Apr 7, before closing the session marginally lower at $162.92.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 39.5% compared with 9.4% growth of both the industry and the S&P 500 composite.
Over the past five years, the company registered earnings growth of 11% compared with the industry’s 12.8% growth. The company’s long-term expected growth rate of 8.2% compares with the industry’s growth projection of 12.5%. AmerisourceBergen’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in the other one, the average surprise being 2.3%.
Image Source: Zacks Investment Research
AmerisourceBergen is witnessing an upward trend in its stock price, prompted by its robust World Courier business. A solid first-quarter fiscal 2022 performance, along with strength in its U.S. healthcare solutions business, is expected to contribute further. However, stiff competition and headwinds from contract renewals persist.
Let’s delve deeper.
Key Growth Drivers
Strength in World Courier Business: Investors are upbeat about World Courier’s solid foothold in global specialty logistics services, which has been driving compelling volume growth and overall performance for ABC. Going forward, World Courier will continue to design and deploy patient-centric and forward-thinking transport services in new areas like in-home clinical trials, making treatment in patients’ homes possible in virtually every therapeutic area.
Strength in U.S. Healthcare Solutions Business: Investors are optimistic about the segment deriving benefits from increasing volume and an 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 quarters to come.
In fiscal first-quarter 2022, revenues at this segment reflected a year-over-year uptick on the back of an increase in specialty product sales, coupled with overall market growth and strength in MWI Animal Health business.
Strong Q1 Results: AmerisourceBergen’s robust first-quarter fiscal 2022 results buoy optimism. The company’s robust segmental performance in the quarter is encouraging. A strong fiscal 2022 outlook and solid organic revenue growth continue to drive its performance. The quarterly results highlight sustained solid performance across its businesses. The company extended its pharmaceutical supply agreement with Express Scripts through 2026. It is well-positioned to deliver long-term, sustainable growth on the back of its diverse and inclusive teams, and investments in people and culture. Expansion of both margins bodes well.
Downsides
Contract Renewals a Headwind: 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. AmerisourceBergen extended the term of 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.
Stiff Competition: AmerisourceBergen operates in a highly competitive pharmaceutical distribution and related healthcare services market. The company’s primary competitors are key MedTech players, along with national generic distributors and regional distributors. The company faces additional competition from manufacturers, chain drugstores, specialty distributors, and packaging and healthcare technology companies.
Key Picks
A few stocks from the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Edwards Lifesciences Corporation (EW - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 20%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 36.5% against the industry’s 55.2% fall over the past year.
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 13.9%. EW’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 6.5%.
Edwards Lifesciences has gained 43.9% compared with the industry’s 1.5% growth over the past year.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2.
Henry Schein has gained 29% compared with the industry’s 9.4% growth over the past year.
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AmerisourceBergen (ABC) Hits 52-Week High: What's Aiding It?
Shares of AmerisourceBergen Corporation scaled a new 52-week high of $163.81 on Apr 7, before closing the session marginally lower at $162.92.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 39.5% compared with 9.4% growth of both the industry and the S&P 500 composite.
Over the past five years, the company registered earnings growth of 11% compared with the industry’s 12.8% growth. The company’s long-term expected growth rate of 8.2% compares with the industry’s growth projection of 12.5%. AmerisourceBergen’s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed the same in the other one, the average surprise being 2.3%.
Image Source: Zacks Investment Research
AmerisourceBergen is witnessing an upward trend in its stock price, prompted by its robust World Courier business. A solid first-quarter fiscal 2022 performance, along with strength in its U.S. healthcare solutions business, is expected to contribute further. However, stiff competition and headwinds from contract renewals persist.
Let’s delve deeper.
Key Growth Drivers
Strength in World Courier Business: Investors are upbeat about World Courier’s solid foothold in global specialty logistics services, which has been driving compelling volume growth and overall performance for ABC. Going forward, World Courier will continue to design and deploy patient-centric and forward-thinking transport services in new areas like in-home clinical trials, making treatment in patients’ homes possible in virtually every therapeutic area.
Strength in U.S. Healthcare Solutions Business: Investors are optimistic about the segment deriving benefits from increasing volume and an 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 quarters to come.
In fiscal first-quarter 2022, revenues at this segment reflected a year-over-year uptick on the back of an increase in specialty product sales, coupled with overall market growth and strength in MWI Animal Health business.
Strong Q1 Results: AmerisourceBergen’s robust first-quarter fiscal 2022 results buoy optimism. The company’s robust segmental performance in the quarter is encouraging. A strong fiscal 2022 outlook and solid organic revenue growth continue to drive its performance. The quarterly results highlight sustained solid performance across its businesses. The company extended its pharmaceutical supply agreement with Express Scripts through 2026. It is well-positioned to deliver long-term, sustainable growth on the back of its diverse and inclusive teams, and investments in people and culture. Expansion of both margins bodes well.
Downsides
Contract Renewals a Headwind: 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. AmerisourceBergen extended the term of 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.
Stiff Competition: AmerisourceBergen operates in a highly competitive pharmaceutical distribution and related healthcare services market. The company’s primary competitors are key MedTech players, along with national generic distributors and regional distributors. The company faces additional competition from manufacturers, chain drugstores, specialty distributors, and packaging and healthcare technology companies.
Key Picks
A few stocks from the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Edwards Lifesciences Corporation (EW - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 20%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 36.5% against the industry’s 55.2% fall over the past year.
Edwards Lifesciences, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 13.9%. EW’s earnings surpassed estimates in three of the trailing four quarters, the average surprise being 6.5%.
Edwards Lifesciences has gained 43.9% compared with the industry’s 1.5% growth over the past year.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2.
Henry Schein has gained 29% compared with the industry’s 9.4% growth over the past year.