This morning, AmerisourceBergen Corp. (ABC) posted first quarter fiscal 2010 earnings of 52 cents per share, beating the Zacks Consensus Estimate by 6 cents. Earnings increased 44% from the year-ago period. Performance was driven by strong revenues, successful generic drug launches, and continued expense management.
 
Total revenues for the quarter increased 11.5% to $19.3 billion. This was attributable to a 12.9% growth in AmerisourceBergen Drug Corp. revenues and a 7.7% rise in Specialty Group revenues. Generic revenues remained strong during the quarter.
 
Gross profit for the first quarter was $563.4 million, which reflected a 15% increase over the gross profit in the year-ago period. The improvement was driven by increased revenue and new generic pharmaceutical launches, especially in the specialty group.
 
Revenue growth, increased gross profit, and expense management helped boost operating income by 33% to $262.4 million.
 
Following the strong first quarter performance, AmerisourceBergen increased its guidance for fiscal 2010. AmerisourceBergen now expects earnings in the range of $1.89 to $1.98, up 12% to 17% from fiscal 2009, on revenue growth in the range of 7-8%. The company was previously expecting earnings in the range of $1.82 – $1.92 per share, on revenue growth in the range of 5-7%. AmerisourceBergen also intends to spend about $350 million in share repurchases in fiscal 2010. During fiscal 2009, AmerisourceBergen spent $450.4 million in share repurchases.
 
We believe the company is well-positioned for growth given the strong performance of its generics and specialty business. We expect AmerisourceBergen to continue to benefit from growth in the pharmaceutical industry, which is driven by factors like an aging population, increased use of generics, and introduction of new treatments. We currently have a Neutral recommendation on the stock.
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