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Cencora (COR) Gains 16.6% YTD: 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 16.6% compared with 6% growth of the industry. The S&P 500 Composite has risen 17.5% 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
Catalysts Driving 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 the price growth. In the fiscal third quarter, the company continued to witness a strong segmental performance due to growth in all markets and strong demand for specialty products, especially GLP-1 drugs.
Per management, Cencora delivered a solid performance by playing a crucial role in the healthcare system, while maintaining efficiency throughout its business. The company remains focused on its strategic priorities and thoughtful capital deployment to deliver long-term growth.
COR has raised its revenue and earnings projections for fiscal 2024, which are also likely to have interested investors. For fiscal 2024, revenues are projected to increase 12%, reportedly and at constant currency. Revenues in the U.S. Healthcare Solutions segment are now expected to increase in the range of 12-13% (previously 11-13%).
In May, Cencora announced that it has agreed to repurchase shares of its common stock from Walgreens Boots Alliance Holdings LLC for approximately $400 million in a private transaction. The company also raised its adjusted earnings per share (EPS) for fiscal 2024, which is now estimated to be in the range of $13.55-$13.65 (previously $13.35-$13.55). The uptick reflects a lower weighted average diluted share count, partially offset by higher net interest expense due to lower investment balances of cash being used for share repurchases.
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
Cencora competes in a highly competitive industry for connected healthcare services and pharmaceutical distribution. Global competitors, regulatory hurdles, and customer and manufacturer consolidation are all affecting the generic business. Additional competitors for the company include packaging and healthcare technology firms, specialty distributors, chain pharmacies, and manufacturers. The increasing competition is likely to affect its business.
A Look at Estimates
COR’s EPS for fiscal 2024 and 2025 are projected to grow 13.1% and 9.7%, respectively, to $13.56 and $14.87 on a year-over-year basis. The Zacks Consensus Estimate for EPS has expanded 10 cents for 2024 and 2025 in the past 30 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 11.5% and 6%, respectively, to $292.38 billion and $310.05 billion on a year-over-year basis.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 3.7% so far this year compared with the industry’s 10.2% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% growth.
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Cencora (COR) Gains 16.6% YTD: 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 16.6% compared with 6% growth of the industry. The S&P 500 Composite has risen 17.5% 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
Catalysts Driving 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 the price growth. In the fiscal third quarter, the company continued to witness a strong segmental performance due to growth in all markets and strong demand for specialty products, especially GLP-1 drugs.
Per management, Cencora delivered a solid performance by playing a crucial role in the healthcare system, while maintaining efficiency throughout its business. The company remains focused on its strategic priorities and thoughtful capital deployment to deliver long-term growth.
COR has raised its revenue and earnings projections for fiscal 2024, which are also likely to have interested investors. For fiscal 2024, revenues are projected to increase 12%, reportedly and at constant currency. Revenues in the U.S. Healthcare Solutions segment are now expected to increase in the range of 12-13% (previously 11-13%).
In May, Cencora announced that it has agreed to repurchase shares of its common stock from Walgreens Boots Alliance Holdings LLC for approximately $400 million in a private transaction. The company also raised its adjusted earnings per share (EPS) for fiscal 2024, which is now estimated to be in the range of $13.55-$13.65 (previously $13.35-$13.55). The uptick reflects a lower weighted average diluted share count, partially offset by higher net interest expense due to lower investment balances of cash being used for share repurchases.
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
Cencora competes in a highly competitive industry for connected healthcare services and pharmaceutical distribution. Global competitors, regulatory hurdles, and customer and manufacturer consolidation are all affecting the generic business. Additional competitors for the company include packaging and healthcare technology firms, specialty distributors, chain pharmacies, and manufacturers. The increasing competition is likely to affect its business.
A Look at Estimates
COR’s EPS for fiscal 2024 and 2025 are projected to grow 13.1% and 9.7%, respectively, to $13.56 and $14.87 on a year-over-year basis. The Zacks Consensus Estimate for EPS has expanded 10 cents for 2024 and 2025 in the past 30 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 11.5% and 6%, respectively, to $292.38 billion and $310.05 billion on a year-over-year basis.
Stocks to Consider
Some better-ranked stocks in the broader medical space are Universal Health Service (UHS - Free Report) , Quest Diagnostics (DGX - Free Report) and ABM Industries (ABM - Free Report) . While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 3.7% so far this year compared with the industry’s 10.2% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% growth.