Cencora Earnings: Strong Utilization and GLP-1s Maintain Growth Momentum and RCA Expands Margins

Narrow-moat Cencora reported strong second-quarter results and demonstrated healthy growth momentum. Total revenue of $75.5 billion was up 10.3% year over year and came in above our expectations. Favorable utilization trends and solid broad-based prescription upticks continue to propel Cencora’s performance in the midst of uncertainty due to tariffs and personnel changes at key regulatory authorities. Sales from GLP-1s (diabetes and weight-loss drugs) increased $2.2 billion, or up 36% against last year, and contributed about 30% of enterprise growth. Against the backdrop of positive performance, management raised EPS guidance about 2.5% at the midpoint, with roughly one third of the increase coming from acquisition and the rest from core distribution strength. After ticking up our near-term assumptions and baking in the acquisition, we raise our fair value estimate to $260 per share from $242.