Company Reports

Narrow-moat Cencora reported second-quarter earnings that came in slightly better than we expected. Total sales of $68.4 billion were up 7.8% year over year as both US and international solutions enjoyed solid utilization trends and delivered solid growth. Management raised the bottom of the adjusted diluted EPS guidance range to $13.30 from $13.25 on the backdrop of strong margin growth. After ticking up our margin assumptions for the near term and accounting for time value of money impact, we raise our fair value estimate to $194 per share from $183.

Cencora is one of three leading domestic wholesalers of branded, generic, and specialty pharmaceutical products. With over $200 billion in annual US healthcare distribution sales, the company supplies roughly one third of the domestic drug distribution market. Its two close competitors are Cardinal Health and McKesson. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the US market.

Narrow-moat Cencora reported first-quarter results that were better than our expectations. Total sales were up 15.0% year over year thanks to a solid performance from the U.S. healthcare segment. On the backdrop of a strong start to the year, management raised its full-year sales guidance for the segment to 10%-12% growth from a previous 7%-10% growth, and the firm’s adjusted diluted EPS range to $13.25-$13.50 from $12.70-$13.00. After upping our near-term assumptions and baking in time value of money impacts, we raise our fair value estimate to $183 per share from $176.

Cencora is one of three leading domestic wholesalers of branded, generic, and specialty pharmaceutical products. With over $200 billion in annual U.S. healthcare distribution sales, the company supplies roughly one third of the domestic drug distribution market. Its two close competitors are Cardinal Health and McKesson. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the U.S. market.

Narrow-moat Cencora, formerly known as AmerisourceBergen, reported solid fourth-quarter results that were above our expectations, wrapping up fiscal 2023 on good footing. Total quarterly sales were up 12.7% year over year as demand for specialty products and GLP-1 medications (for diabetes and weight loss) continue to boost sales. Management also provided healthy guidance for fiscal 2024; it expects U.S. healthcare revenue to be up 7%-10% for the full year, international healthcare to be up 4%-8%, and adjusted diluted EPS to grow roughly 6%-8% despite lowered contributions from COVID-19-related items. After baking in these numbers and rolling our cash flow model, we are raising our fair value estimate to $176 per share from $162.

Cencora is one of three leading domestic wholesalers of branded, generic, and specialty pharmaceutical products. With over $200 billion in annual U.S. healthcare distribution sales, the company supplies roughly one third of the domestic drug distribution market. Its two close competitors are Cardinal Health and McKesson. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the U.S. market.

Cencora is one of three leading domestic wholesalers of branded, generic, and specialty pharmaceutical products. With over $197 billion in U.S. human healthcare solutions sales in fiscal 2022, the company supplies roughly one third of the domestic drug distribution market. Its two close competitors are Cardinal Health and McKesson. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the U.S. market.

Narrow-moat AmerisourceBergen’s third-quarter results landed slightly ahead of our expectations. Strong volume growth supported a top-line increase of 11.5% year over year and pushed management to slightly raise full-year guidance to at least 8% revenue growth from a prior range of 6%-8%. We are raising our fair value estimate to $162 from $149 after baking in impacts from an improved near-term outlook and time value of money.

AmerisourceBergen is one of three leading domestic wholesalers of branded, generic, and specialty pharmaceutical products. With over $197 billion in U.S. human healthcare solutions sales in fiscal 2022, the company supplies roughly one third of the domestic drug distribution market. Its two close competitors are Cardinal Health and McKesson. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the U.S. market.

Narrow-moat AmeirsourceBergen reported second-quarter results that were higher than expected. Total sales were up 9.9% year over year, driven by strong volume growth. We maintain our fair value estimate of $149 per share as the minor outperformance doesn't impact our valuation.

Narrow-moat AmerisourceBergen reported its first-quarter earnings with results that were on track with our assumptions. We've raised our fair value estimate to $149 from $148 mainly due to the time value of money.

AmerisourceBergen is one of three leading domestic wholesalers of branded, generic, and specialty pharmaceutical products. With over $197 billion in U.S. human healthcare solutions sales in fiscal 2022, the company supplies roughly one third of the domestic drug distribution market. Its two close competitors are Cardinal Health and McKesson. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the U.S. market.

After reviewing our key valuation assumptions, we have lowered our fair value estimate for AmerisourceBergen to $148 per share from $155.

AmerisourceBergen is one of three leading domestic wholesalers of branded, generic, and specialty pharmaceutical products. With over $197 billion in U.S. human healthcare solutions sales in fiscal 2022, the company supplies roughly one third of the domestic drug distribution market. Its two close competitors are Cardinal Health and McKesson. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the U.S. market.

Narrow-moat AmerisourceBergen posted sound fourth-quarter results, and we're maintaining our fair value estimate of $155 per share. The firm’s performance this quarter, along with that of McKesson, has proven the industry’s resilience to cost inflation felt by many of its suppliers.

Narrow-moat AmerisourceBergen posted solid fiscal third-quarter results characterized by high-level thematic factors including foreign-exchange pressures and a continued COVID-19 sales boost. Management acknowledged a few risks such as inflation in the next few quarters and the inevitability of generic drug price erosion in the long term. Despite its vulnerability to these macroeconomic trends, the company has been successful in strengthening its competitive position in the drug supply chain over time. We maintain our $155 fair value estimate and narrow moat rating.

AmerisourceBergen is a leading domestic wholesaler of branded, generic, and specialty pharmaceutical products. With over $210 billion in annual U.S. drug distribution revenue, Amerisource supplies nearly one third of the overall market, comparable to McKesson and slightly outpacing Cardinal Health in market share. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the U.S. market. The highly consolidated pharmaceutical wholesale market reflects the substantial scale-based cost advantages held by the largest players, with smaller wholesalers struggling to maintain profits.

Overall, we were pleased with AmerisourceBergen's solid performance during the fiscal second quarter, which benefited from a higher-than-expected contribution from COVID-19 treatment distribution. We are raising our fair value estimate to $155 per share from $151 to account for a nominal top- and bottom-line guidance increase by management and a slight uptick in our margin forecast for 2023. We are maintaining our long-term growth and margin expectations, with a slight improvement to operating profit in our 2023 forecast stemming from higher-margin COVID-19 treatment revenue.

AmerisourceBergen is a leading domestic wholesaler of branded, generic, and specialty pharmaceutical products. With over $210 billion in annual U.S. drug distribution revenue, Amerisource supplies nearly one third of the overall market, comparable to McKesson and slightly outpacing Cardinal Health in market share. Together, the three operate as a pharmaceutical wholesale and distribution oligopoly, supplying over 90% of the U.S. market. The highly consolidated pharmaceutical wholesale market reflects the substantial scale-based cost advantages held by the largest players, with smaller wholesalers struggling to maintain profits.

Narrow-moat AmerisourceBergen's first fiscal quarter results were in line with our expectations, with revenue growing 13.5% year over year, largely due to contribution from the Alliance Healthcare acquisition in June 2021. Following the reversal of our previous macro-level forecast that the U.S. corporate tax rate would rise to 26% in 2022 through legislation, we are raising our fair value estimate for AmerisourceBergen to $151 per share, from $144.