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AmerisourceBergen (ABC) Q1 Earnings: What's in the Cards?

Zacks Equity Research

AmerisourceBergen Corporation’s ABC first-quarter fiscal 2019 results are scheduled to release on Jan 31. While the company’s core Pharmaceutical Distribution unit is likely to drive growth, stiff competition is likely to mar prospects.

Fiscal Q4 Results

AmerisourceBergen posted adjusted earnings of $1.45 per share in fourth-quarter fiscal 2018, which exceeded the Zacks Consensus Estimate of $1.44 and improved 9% year over year.

Revenues increased almost 10.7% to $43.29 billion but missed the Zacks Consensus Estimate of $43.53 billion.

The company delivered a positive earnings surprise in the trailing four quarters, the average being 6.9%.

Which Way Are Q1 Estimates Treading?

For the quarter to be reported, the Zacks Consensus Estimate for revenues is pegged at $43.52 billion, reflecting 7.5% growth year over year. The same for earnings stands at $1.50, indicating year-over-year decline of 3.2%.

Let’s delve deeper to analyze how things are shaping up before the earnings announcement.

Pharmaceutical Distribution Unit to Drive Q1

Increasing volume and an expanding customer base at this segment are likely to boost revenues. This segment serves healthcare providers in the pharmaceutical supply channel. Not to forget, the Pharmaceutical Distribution segment accounted for 96.4% of the company’s net revenues in the last reported quarter. Moreover, the segment’s revenues grew 3.9% on a year-over-year basis to $41.73 billion.

The Zacks Consensus Estimate for Pharmaceutical Distribution stands at $40.46 billion, mirroring an improvement of 11.5% from the year-ago quarter number.

Per management, the segment surpassed the company’s expectations in the past few of quarters. Strong organic growth rates in the U.S. pharmaceutical market, improving patient access to medical care, improved economic conditions and population demographics should reflect in first-quarter fiscal 2019 results.

AmerisourceBergen Corporation Price and Consensus


AmerisourceBergen Corporation Price and Consensus | AmerisourceBergen Corporation Quote

Other Factors to Consider

Other Segment

This segment consists of Global Commercialization Services and Animal Health, and includes World Courier, AmerisourceBergen Consulting and MWI. In the last reported quarter, the Other segment contributed 3.7% to the company’s net revenues. Notably, revenues at the segment improved 7.9% year over year to $1.60 billion in the fiscal fourth quarter.

We expect the segment to witness robust growth in the quarter to be reported. The Zacks Consensus Estimate for first-quarter revenues is pegged at $1.64 billion, up 6.1% year over year.

World Courier unit

The World Courier unit, in particular, is likely to be one of the key growth drivers of the Other segment. The World Courier business delivered excellent results, with record gains in the last reported quarter. The unit witnessed outstanding operating income growth as well. We expect similar trends in the fiscal first quarter.

What Does Our Model Say?

Our proven model clearly indicates that a stock needs to have both — a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) — to deliver a positive earnings surprise. This is not the case here.

Earnings ESP: AmerisourceBergen has an Earnings ESP of -0.95%. 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.

Please note that we caution against stocks with a Zacks Rank #4 or 5 (Sell rated) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat in the upcoming releases:

PerkinElmer, Inc. PKI has an Earnings ESP of +0.77% and a Zacks Rank #3.

Illumina, Inc. ILMN has an Earnings ESP of +0.32% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

DexCom DXCM has an Earnings ESP of +8.93% and a Zacks Rank #2.

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