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Image from Chaikin Analytics for Desktop 2015
AmerisourceBergen (ABC) is a buy on any pullbacks to the $108-110 area. It recently triggered a Money Flow buy in Chaikin Analytics and rallied 10% from $103 to $114.74. A retracement of that advance would represent an attractive entry point for both investors and traders.
ABC is one of the largest global pharmaceutical sourcing and distribution companies. It works with healthcare providers as well and drug and biotech manufacturers. AmerisourceBergen has over $120 billion in revenue and recently acquired MWI Veterinary Supply, a leading distributor of animal health products.
On 1/28/15 the company reported its 6th consecutive earnings and revenue beat. Their 1st quarter beat Wall Street estimates by 19% and the company raised its guidance for 2015 to $4.45-4.55 per share vs. $3.97 in 2014. ABC is experiencing its fastest growth in the last 5 years and analysts have subsequently raised estimates to $4.65 for 2015.
Adding fuel to their earnings growth is the introduction of a number of drugs that successfully treat Hepatitis-C and a 10-year contract signed with Walgreens in 2013, to provide both branded and generic drugs to this leading world-wide drug retailer.
ABC has benefitted from recent upgrades by both Credit Suisse and UBS who have raised their price targets to the $118-$120 area. UBS upgraded AmerisourceBergen to Buy after the Food and Drug Administration approved the first biosimilar drug in the U.S. Like generic drugs, biosimilars lower prices and encourage insurance reimbursements. UBS sees ABC as having the greatest earnings leverage in biosimilar drugs over the next 5 years. It estimates that over $65 billion in biologics may face biosimilar competition between 2015-2019.
Image from Chaikin Analytics for Desktop 2015
AmerisourceBergen has a very bullish Chaikin Power Gauge stock rating and is in the very strong Medical Products industry group. The bullish Power Gauge rating is being driven by recent bullish Financial Metrics, notably positive free cash flow and a relatively low Price to Sales ratio. The Technical picture is very strong with the stock outperforming the market since late May of 2014, culminating in new all-time highs in the past week. Analysts have been raising the earnings estimates for 2015 and upgrading their opinions for ABC.
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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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
