) is set to report fiscal third quarter 2014 results on Jul 24,
Last quarter, AmerisourceBergen reported a 6.00% positive
surprise. AmerisourceBergen has delivered positive earnings
surprises in three of the last four quarters with an average beat
Factors at Play
AmerisourceBergen had entered into a strategic agreement with
) and Alliance Boots GmbH in fiscal 2013. The agreement includes a
10-year pharmaceutical distribution contract with Walgreen and
access to generic drugs and related pharmaceutical products through
the Walgreens Boots Alliance Development joint venture. We believe
the distribution deal with Walgreen will positively impact sales in
the third quarter.
However, operating margin is expected to be under pressure in
2014 due to revenue mix shift to lower margin business and on
boarding of the Walgreen contract. Operating expenses are also
estimated to increase as the company continues to invest in its
core drug business to support substantial volume growth and
maintain high service levels.
Our proven model does not conclusively show that
AmerisourceBergen is likely to beat earnings this quarter. That is
because a stock needs to have both a positive
and a Zacks Rank of #1, 2 or 3 for this to happen. That is not the
case here, as you will see below.
: The ESP, which represents the difference between the Most
Accurate estimate and the Zacks Consensus Estimate, is 0.00%. This
is because both the Most Accurate Estimate and Zacks Consensus
Estimate currently stand at 92 cents.
Zacks Rank #2 (Buy)
: AmerisourceBergen's Zacks Rank #2 when combined with a 0.00% ESP
makes surprise prediction difficult.
We caution against stocks with Zacks Ranks #4 and #5 (Sell-rated
stocks) going into the earnings announcement, especially when the
company is seeing negative estimate revisions momentum.
Other Stocks to Consider
Here are some other companies in the broader healthcare sector
that you may want to consider as our model shows that they have the
right combination of elements to post an earnings beat this
Impax Laboratories Inc.
) has an Earnings ESP of +26.83% and holds a Zacks Rank #3 (Hold).
Impax will report second quarter earnings on Aug 6.
) has an Earnings ESP of +2.33% and holds a Zacks Rank #1 (Strong
Buy). Mallinckrodt will report third quarter earnings on Aug 7.
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AMERISOURCEBRGN (ABC): Free Stock Analysis
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