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AmerisourceBergen (ABC) to Post Q4 Earnings: What's in Store?

Zacks Equity Research

AmerisourceBergen Corporation ABC is scheduled to release fourth-quarter fiscal 2019 results on Nov 7, before the opening bell.

In the last reported quarter, the company delivered a positive earnings surprise of 7.9%. Further, it has an average four-quarter positive surprise of 5.8%.

Let's take a look at how things are shaping up prior to this announcement.

Which Way are Q4 Estimates Treading?

The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $45.33 billion, indicating an improvement of 4.7% from the year-ago quarter. The consensus estimates for earnings stands at $1.58, suggesting growth of 8.9% from the year-ago reported figure.

Pharmaceutical Distribution Unit to Drive Q4

Increasing volume and expanding customer base at this segment are likely to have driven the fourth-quarter revenues. This segment serves healthcare providers in the pharmaceutical supply channel. Continued strength in Specialty Distribution, solid organic growth rates in the U.S. pharmaceutical market, and improving patient access to medical care are likely to have contributed to the to-be-reported quarter’s top line.

The Zacks Consensus Estimate for Pharmaceutical Distribution stands at $43.68 billion, indicating an improvement of 4.7% from the year-ago quarter.

However, the company has narrowed guidance for operating income growth in this segment. The metric is estimated to be in the low-single digit percentage range.

AmerisourceBergen Corporation Price and EPS Surprise


AmerisourceBergen Corporation Price and EPS Surprise

AmerisourceBergen Corporation price-eps-surprise | AmerisourceBergen Corporation Quote

Other Factors to Consider

World Courier unit

The World Courier unit, in particular, is likely to have contributed to the Other segment’s performance in the fourth quarter. Bolstering customer experience through new offerings, technology improvements and delivery of high tax logistics services is anticipated to get reflected in the company’s fourth-quarter results.
The company’s fourth-quarter top line is likely 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 is anticipated to have driven the top line in the to-be-reported quarter, backed by growth in Canadian operations and World Courier unit and revenues from MWI.

In fact, the Zacks Consensus Estimate for fiscal fourth-quarter revenues for this segment is pegged at $1.73 billion, suggesting growth of 8.6% year-ago reported figure.

This apart, the company is likely to have benefited from generics growth in the to-be-reported quarter. Further, new product launches are likely to have contributed to overall performance.

However, for fiscal 2019, the company anticipates PharMEDium to be a headwind of around 3%, which represents an adjusted operating loss of approximately $50 million.Consequently, this trend is likely to have affected the upcoming quarterly results.

Moreover, stiff competition, as the company operates in a highly competitive pharmaceutical distribution and related health care services market, is likely to get reflected in the fourth-quarter performance.

The company has raised adjusted EPS guidance for fiscal 2019 (currently adjusted EPS is estimated in the range of $7.00-$7.10, up from the previously guided range of $6.70-$6.90). The company’s fourth-quarter bottom line is likely to reflect the impact of lower share count, possible higher operating income and lower net interest expense.

What Our Quantitative Model Suggests

Per our proven model, a 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 the case here as you will see.

Earnings ESP: AmerisourceBergen has an Earnings ESP of +0.55%. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter.

Zacks Rank: AmerisourceBergen carries a Zacks Rank #3.

Other Stocks Worth a Look

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

Tandem Diabetes Care, Inc. TNDM has an Earnings ESP of +33.33% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Neovasc Inc. NVCN has an Earnings ESP of +16.87% and a Zacks Rank #3.

ShockWave Medical, Inc. SWAV has an Earnings ESP of +3.55% and a Zacks Rank #3.

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