UBS Cuts Estimates on AmerisourceBergen (ABC) Following 4Q
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UBS reiterated a Neutral rating on AmerisourceBergen (NYSE: ABC), and cut the price target to $80.00 (from $87.00), following the company's 4Q earnings report. UBS reduced estimates to account for incremental pricing pressures, with FY17 EPS down from $5.83 to $5.70 and our FY18 EPS from $6.49 to $6.31. The key focal points moving forward will be incremental market data on price updates across independent pharmacy business up for renewal.
Analyst Michael Cherny commented, "AmerisourceBergen's results came in above lowered expectations, but the real focus was on management's comments on its independent pharmacy business. ABC indicated pricing is rational and its market share has remained stable, running counter to peer McKesson's comments last week that recent pricing in this market segment has come under significant pressure. This also led to a significant divergence in operating profit, with ABC up modestly in this calendar quarter while MCK/CAH were both down ~18% (not apples-to-apples but a stark difference). In addition to the other headwinds facing distributors near-term (brand inflation waning, generic deflation continuing), the uncertainty surrounding independent pharmacy pricing adds another question mark that we think caps multiples near-term. Given the near-term uncertainty surrounding the group, we maintain our Neutral rating on ABC (even with today’s relief rally)."
Shares of AmerisourceBergen closed at $75.96 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change
Related EntitiesUBS, Earnings
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