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Analyst Estimates: Here's What Brokers Think Of AmerisourceBergen Corporation (NYSE:ABC) After Its First-Quarter Report

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Simply Wall St
·4 min read
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A week ago, AmerisourceBergen Corporation (NYSE:ABC) came out with a strong set of first-quarter numbers that could potentially lead to a re-rate of the stock. The company beat expectations with revenues of US$53b arriving 4.0% ahead of forecasts. Statutory earnings per share (EPS) were US$1.81, 3.7% ahead of estimates. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

View our latest analysis for AmerisourceBergen

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After the latest results, the 14 analysts covering AmerisourceBergen are now predicting revenues of US$205.3b in 2021. If met, this would reflect a credible 5.5% improvement in sales compared to the last 12 months. Earnings are expected to improve, with AmerisourceBergen forecast to report a statutory profit of US$7.54 per share. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$200.7b and earnings per share (EPS) of US$7.71 in 2021. So it's pretty clear consensus is mixed on AmerisourceBergen after the latest results; whilethe analysts lifted revenue numbers, they also administered a small dip in per-share earnings expectations.

The consensus price target was unchanged at US$126, suggesting the business is performing roughly in line with expectations, despite some adjustments to profit and revenue forecasts. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic AmerisourceBergen analyst has a price target of US$153 per share, while the most pessimistic values it at US$104. There are definitely some different views on the stock, but the range of estimates is not wide enough as to imply that the situation is unforecastable, in our view.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the AmerisourceBergen's past performance and to peers in the same industry. We can infer from the latest estimates that forecasts expect a continuation of AmerisourceBergen'shistorical trends, as next year's 5.5% revenue growth is roughly in line with 6.8% annual revenue growth over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to see their revenues grow 7.2% per year. So it's pretty clear that AmerisourceBergen is expected to grow slower than similar companies in the same industry.

The Bottom Line

The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for AmerisourceBergen. Fortunately, they also upgraded their revenue estimates, although our data indicates sales are expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for AmerisourceBergen going out to 2023, and you can see them free on our platform here.

However, before you get too enthused, we've discovered 2 warning signs for AmerisourceBergen (1 is concerning!) that you should be aware of.

This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.