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AmerisourceBergen (ABC) to Post Q3 Earnings: What's in Store?

AmerisourceBergen Corporation ABC is scheduled to release third-quarter fiscal 2020 results on Aug 5, before the opening bell.

In the last reported quarter, the company delivered an earnings surprise of 5.3%. Its earnings surpassed estimates in each of the trailing four quarters, the average beat being 5.1%.

Q3 Estimates

The Zacks Consensus Estimate for third-quarter fiscal 2020 revenues is pegged at $44.76 billion, indicating a decline of 1.1% from the prior-year quarter. The consensus mark for earnings stands at $1.55, suggesting a decrease of 11.9% from the year-ago reported figure.

Pharmaceutical Distribution Unit Holds Key

Sustained growth in specialty product sales and expanding customer base at this segment are likely to have benefited the fiscal third-quarter performance. Notably, this segment serves healthcare providers in the pharmaceutical supply channel. Solid organic growth rates in the U.S. pharmaceutical market, population demographics and improving patient access to medical care might get reflected in the to-be-reported quarter’s results.

Moreover, operating income at this segment is expected to improve in the low-to-mid-single digit percent range in fiscal 2020.

Other Factors to Note

World Courier unit

The World Courier unit, in particular, is likely to have contributed to the Other segment’s performance in the fiscal third quarter. Enhancing customer experience through new offerings, technology improvements and delivery of high tax logistics services might get reflected in the fiscal third-quarter results.

The company’s to-be-reported quarter’s results are likely to reflect solid demand for its high touch global specialty logistics.

Other Segment

This segment consists of Global Commercialization Services and Animal Health, and includes World Courier, AmerisourceBergen Consulting and MWI. The segment may have benefited the fiscal third-quarter performance, courtesy of growth in AmerisourceBergen Consulting Services and MWI.

In fact, the Zacks Consensus Estimate for fiscal third-quarter revenues for this segment is pegged at $1.79 billion, suggesting growth of 3.5% year-ago reported figure.

AmerisourceBergen Corporation Price and EPS Surprise

AmerisourceBergen Corporation Price and EPS Surprise

AmerisourceBergen Corporation price-eps-surprise | AmerisourceBergen Corporation Quote

Apart from this, the company is likely to have gained from generics growth in the to-be-reported quarter. Further, new product launches may have contributed to overall performance.

However, stiff competition, as the company operates in a highly competitive pharmaceutical distribution and related health care services market, might have weighed on the fiscal third-quarter performance.

Further, adjusted operating expenses in fiscal 2020 are estimated to increase in the low-single digit percent range.

Moreover, it is important to note here that the COVID-19 pandemic had a greater impact on the to-be-reported quarter compared with the fiscal second quarter, which witnessed a partial impact. Consequently, the company’s fiscal third-quarter results are likely to reflect the impact of the same.

What Our Quantitative Model Suggests

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. This is not the case here as you will see.

Earnings ESP: AmerisourceBergen has an Earnings ESP of -4.78%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: It carries a Zacks Rank #3.

Stocks Worth a Look

Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.

Integra LifeSciences Holdings Corporation IART has an Earnings ESP of +20.69% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

GW Pharmaceuticals plc GWPH has an Earnings ESP of +17.38% and a Zacks Rank of 3.

Nevro Corp. NVRO has an Earnings ESP of +15.17% and a Zacks Rank of 3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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