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AmerisourceBergen Corp ABC

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AmerisourceBergen Beats Tempered Guidance; Reverting Estimates Pushes FVE to $110 From $95

Soo Romanoff Equity Analyst

Analyst Note

| Soo Romanoff |

Narrow-moat AmerisourceBergen Corp. reported stronger-than-expected third-quarter results relative to recently lowered guidance amid the coronavirus pandemic. Reported operating results were almost identical to the prior year (with minor exceptions with taxes and share count) and likely reflects the inelastic demand for drugs along with somewhat heightened reliance on supply chain partners with notable scale during the pandemic. Management noted stabilization in the business in June and somewhat of a volume pick-up in July, which resonates with observations from other companies under our coverage. With the stabilization of volumes, management confidently revised its full-year normalized EPS range to $7.80-$7.95, similar to the $7.55-$7.80 range provided earlier in the year. Incorporating the revised guidance and anticipated stabilization, we have increased fourth-quarter results to match the high end of the guidance range, which in turn pushes up our fair value estimate to $110 from $95 per share.

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Company Profile

Business Description

AmerisourceBergen is a leading global third-party logistics provider engaged in wholesale pharmaceutical sourcing and distribution of specialty, brand-name, and generic pharmaceuticals and related services to acute-care hospitals and health systems, independent and chain retail pharmacies, mail order pharmacies, medical clinics, long-term care and alternate site pharmacies, physician practices, dialysis clinics, and other healthcare customers. By acquiring smaller companies, management has attained the ability to transport biopharmaceuticals, distribute veterinary pharmaceuticals and vaccines, and provide inventory and reimbursement consulting services to providers.

1300 Morris Drive
Chesterbrook, PA, 19087-5594
T +1 610 727-7000
Sector Healthcare
Industry Medical Distribution
Most Recent Earnings Jun 30, 2020
Fiscal Year End Sep 30, 2020
Stock Type Classic Growth
Employees 22,000