Cencora Earnings: Solid Demand Trends and Improved Specialty Portfolio Fuel Momentum

Narrow-moat Cencora started the year on a strong footing after delivering solid first-quarter results. Total sales of $81.5 billion were up 12.8% year over year and came ahead of our $78.1 billion estimate. Momentum in utilization trends remains strong and helped offset declining contributions from covid vaccines and therapies. Adjusted EPS of $3.73 also came in better than our $3.54 estimate. Against the backdrop of a positive readout as well as baking in RCA acquisition impact, management ticked up guidance for both revenue and adjusted operating income. After raising our near-term estimates and accounting for the time value of money, we raise our fair value estimate to $242 per share from $230; shares are fairly valued in 3-star territory.