AmerisourceBergen Corporation (Holding Co) (ABC) Buy or Sell Stock Guide
The analysis below may be helpful to you if you have any of the following questions about ABC stock:
- Is ABC a buy or a sell?
- Should I sell or hold ABC stock today?
- Is ABC a good buy / a good investment?
- What are ABC analyst opinions, recommendations, ratings?
Here are ABC stock buy reasons/signals:
1. AmerisourceBergen is a major pharmaceutical distributor with close to $100 billion in annual revenue. Its size makes the firm a preferred partner among major drug manufacturers and many retail pharmacy customers.
2. Pharmaceutical spending will continue to grow robustly over the next several years, given demographic shifts and the expansion of medical insurance coverage to the currently uninsured.
3. As specialty drug spending continues to increase, we believe distributors have an opportunity to capture value from this niche market and improve both top- and bottom-line results.
4. ABC quarterly revenue growth was 10.70%, higher than the industry and sector average revenue growth (5.80% and 5.43%, respectively).
5. ABC profitability is improving. The YoY profit margin change was 0.75pp.
6. ABC forward dividend yield is 2.11%, higher than the industry (1.84%) and sector (0.56%) forward dividend yields.
7. ABC average analyst rating is Buy.
8. ABC average analyst price target ($94.07) is above its current price ($77.77).
Here are ABC stock sell reasons/signals:
1. Profit margins for AmerisourceBergen are razor-thin, making any significant pricing pressure a major headwind.
2. In an effort to procure a cheaper supply of generic product, AmerisourceBergen has partnered with Walgreens to enhance its negotiating power and fixed-cost scale. If this partnership fails, the outlook for future revenue and profit growth will take a hit.
3. Sales volume could take a material hit if the U.S. federal government were to implement scaled-back healthcare legislation.
4. ABC Price/Book ratio is 5.59, and it’s high compared to its industry peers’ P/B ratios.
5. ABC short interest (days to cover the shorts) ratio is 3.17. The stock garners more short interest than the average industry, sector or S&P 500 stock.
What are your thoughts on ABC?
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