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AmerisourceBergen (ABC) Beats on Q2 Earnings, Lags Revenues

AmerisourceBergen Corporation ABC posted adjusted earnings of $1.77 per share in the second quarter of fiscal 2017, beating the Zacks Consensus Estimate of $1.71 and increasing 5.4% on a year-over-year basis. The upside was primarily driven by a lower tax rate.

Revenues improved almost 4% to $37.1 billion in the reported quarter. However, reported revenues were lower than the Zacks Consensus Estimate of $38.3 billion.

AmerisourceBergen Corporation (Holding Co) Price, Consensus and EPS Surprise

 

AmerisourceBergen Corporation (Holding Co) Price, Consensus and EPS Surprise | AmerisourceBergen Corporation (Holding Co) Quote

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Stock Price & Estimate Revision Trend

AmerisourceBergen has had an impressive run on the bourse over the last six months. The company gained roughly 15%, higher than the Zacks categorized Medical - Dental Supplies sub-industry’s addition of almost 11.9%.

Moreover, the current level compares favorably with the S&P 500’s return of 12.7% over the same time frame. This, together with a long-term expected earnings growth rate of 9.1%, instills confidence in investors.

However, the estimate revision for the stock has been unfavorable. Two analysts moved downward over the last one month, compared to one movement in the opposite direction. As a result, the current year estimates fell 0.2% to $5.82.

AmerisourceBergen carries a Zacks Rank #3 (Hold).

Revenue Segments

Pharmaceutical Distribution segment: In the reported quarter, revenues at the segment increased 4% to $35.5 billion. Within the segment, AmerisourceBergen Drug Corp. revenues were up 3.6%, primarily on the back of solid organic sales growth.

The AmerisourceBergen Specialty Group unit in the segment performed impressively during the quarter, with revenues rising 11% year over year, courtesy of strong oncology product sales and solid performance by the third-party logistics business.

Other segment: This segment includes AmerisourceBergen Consulting Services (ABCS), World Courier and MWI Veterinary Supply. Revenues at the segment came in at $1.7 billion, up 6% on a year-over-year basis.

Operating Performance

Operating expenses (as a percentage of revenues) in the second quarter were 1.57%, compared to 1.61% in the year-ago quarter.

Operating income (as a percentage of revenue) contracted 8 basis points (bps) to 1.58% in the quarter under review.

As a percentage of revenues, gross profit declined 12 bps in the reported quarter on a year-over-year basis to 3.15%.

Guidance

AmerisourceBergen expects fiscal 2017 revenue growth in the range of 5.5% to 6.5%, significantly lower than the previously provided band of 6.5% to 8%.

The company expects adjusted diluted earnings per share for fiscal 2017 in the band of $5.77 to $5.92, up from the previously provided $5.72 to $5.92.

Meanwhile, AmerisourceBergen expects brand drug inflation in the range of 7% to 9%.

Key Picks

Better-ranked stocks in the broader medical sector include Neovasc Inc. NVCN, Hologic, Inc. HOLX and Sunshine Heart Inc SSH. Notably, Neovasc and Hologic sport a Zacks Rank #1 (Strong Buy), while Sunshine Heart has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hologic has a long-term expected earnings growth rate of 11.33%. The stock has a solid one-year return of roughly 33.6%.

Sunshine Heart posted a positive earnings surprise of 58.24% in the last reported quarter. The stock recorded a stellar EPS growth rate (last 3–5 years of actual earnings) of almost 22%.

Neovasc saw a stellar gain of 11.8% over the last three months. The company projects sales growth of 102.88% for the current year.

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Hologic, Inc. (HOLX): Free Stock Analysis Report
 
Neovasc Inc. (NVCN): Free Stock Analysis Report
 
Sunshine Heart Inc (SSH): Free Stock Analysis Report
 
AmerisourceBergen Corporation (Holding Co) (ABC): Free Stock Analysis Report
 
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