We recently upgraded drug distributor AmerisourceBergen (ABC) to Outperform based on strong second quarter results and improving outlook for fiscal 2010.
Second quarter earnings came in at 63 cents per share beating the Zacks Consensus Estimate by 8 cents. Earnings increased 34% 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%.
Following the strong second quarter performance, AmerisourceBergen increased its guidance for fiscal 2010 for the second time this year. The company had earlier raised its guidance following strong first quarter results.
AmerisourceBergen now expects earnings in the range of $2.01 – $2.10, up 19% to 24% from fiscal 2009. The company was previously expecting earnings in the range of $1.89 to $1.98. Revenue growth guidance remained unchanged at 7-8%. Revenue growth should be in the range of 3-5% in the second half of fiscal 2010.
We believe that the company is well positioned for growth given the strong performance of its generics and specialty pharma business. AmerisourceBergen’s generics business continues to perform well with the company benefiting from the rapid growth of generic pharmaceuticals in the U.S. market. With several branded products scheduled to lose exclusivity in the coming years, we expect AmerisourceBergen’s generics business to continue witnessing growth in the coming years.
Meanwhile, AmerisourceBergen’s specialty pharmaceuticals business has a major presence in the rapidly growing specialty pharmaceutical segment. The company enjoys a leading position in distributing products and services to community oncologists and other physicians and is working on expanding its offerings in specialty distribution and services.
AmerisourceBergen’s primary competitors in the pharmaceutical distribution market include Cardinal Health (CAH) and McKesson (MCK).
Read the full analyst report on “ABC”
Read the full analyst report on “CAH”
Read the full analyst report on “MCK”
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