Yahoo Finanza Cencora (COR) Gains 13.2% YTD: What's Driving the Stock?
Cencora, Inc. COR witnessed strong momentum in the year-to-date period. Shares of the company have rallied 13.2% compared with 3.7% growth of the industry. The S&P 500 Composite has risen 7.4% during the same time frame.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.
Chesterbrook, PA-based Cencora is one of the world’s largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce healthcare costs and improve patient outcomes. The company is well-positioned to deliver long-term sustainable growth on the back of its diverse and inclusive teams.
Catalysts Driving Growth
The rally in the company’s share price can be attributed to the robust growth in the company’s U.S. Healthcare Solutions segment. The optimism led by a solid second-quarter fiscal 2024 performance and robust business potential are expected to contribute further.
Cencora exited second-quarter fiscal 2024 with decent results. The company witnessed solid top-line and bottom-line performances in the reported quarter, which is likely to have aided in the price growth. In the fiscal second quarter, Cencora’s U.S. Healthcare Solutions segment revenues witnessed an uptick of 8% year over year, with solid growth in its distribution businesses, including continued growth in sales to specialty physician practices and health systems and volume growth in GLP-1s. International Healthcare Solutions revenues also increased 5% on a reported basis and 10% on a constant currency (cc) basis on the back of increased sales in its European distribution and Canadian businesses.
COR has raised its revenue and earnings projections for fiscal 2024, which are also likely to have interested investors. For fiscal 2024, revenues are projected to increase 10-12%, reportedly as well as at cc. The top line in the U.S. Healthcare Solutions segment is now expected to grow in the range of 11-13% (previously 7-10%). Revenues in the International Healthcare solutions business are estimated to increase between 4% and 7%.
In May, Cencora announced that it has agreed to repurchase shares of its common stock from Walgreens Boots Alliance Holdings LLC for approximately $400 million in a private transaction. The company also raised its adjusted earnings per share (EPS) for fiscal 2024, which is now estimated to be in the range of $13.35-$13.55 (previously $13.30-$13.50). The uptick reflects a lower weighted average diluted share count, partially offset by higher net interest expense due to lower investment balances of cash being used for share repurchases.
Cencora’s multinational distribution footprint and global platform of commercialization services make it a natural partner for manufacturers bringing their products to market. With the company’s increasing presence in pharma services, Cencora is able to cultivate relationships with pharma companies early in the development process and position itself as not only a provider of logistics and distribution services but also as an integrated partner able to support the successful commercialization of its products. These factors are likely to have favored the stock’s growth.
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Risk Factors
Cencora operates in a highly competitive pharmaceutical distribution and related healthcare services market. The generic industry is facing consolidation of customers and manufacturers, global competitors and regulatory challenges. The company encounters additional competition from manufacturers, chain drugstores, specialty distributors, and packaging and healthcare technology companies. The increasing competition is likely to affect its business.
A Look at Estimates
COR’s EPS for fiscal 2024 and 2025 are projected to grow 12.1% and 9.6%, respectively, to $13.44 and $14.74 on a year-over-year basis. The Zacks Consensus Estimate for EPS has expanded 2 cents for 2024 and 3 cents for 2025 in the past 30 days.
Revenues for fiscal 2024 and 2025 are anticipated to rise 10.6% and 6.5%, respectively, to $290.08 billion and $308.81 billion on a year-over-year basis.
Stocks to Consider
Some better-ranked stocks in the broader medical space that have announced quarterly results are DaVita DVA, Ecolab ECL and Boston Scientific Corporation BSX.
DaVita, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 13.6%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 29.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
DaVita’s shares have gained 44% compared with the industry’s 20.4% rise in the past year.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 1.7%.
Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in the trailing four quarters, the average surprise being 7.5%.
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Boston Scientific Corporation (BSX) : Free Stock Analysis Report
Ecolab Inc. (ECL) : Free Stock Analysis Report
DaVita Inc. (DVA) : Free Stock Analysis Report
Cencora, Inc. (COR) : Free Stock Analysis Report
