AmerisourceBergen Corporation (Holding Co) (ABC) Buy or Sell Stock Guide

Last updated: Oct 12, '19

Are you looking for the analysis of AmerisourceBergen Corporation (Holding Co) (ABC) stock? Are you wondering what the bulls and the bears say about it?

If so, you came to the right place. In this stock guide, we will share with you 8 reasons to buy and 6 reasons to sell ABC stock. You’ll get a perspective on what the bulls and the bears say about it.

The analysis below may be also helpful to you if you have any of the following questions about ABC stock:

  • Is ABC a buy or a sell?
  • Should I sell or hold ABC stock today?
  • Is ABC a good buy / investment?
  • What are ABC analyst opinions, recommendations and ratings?

Let’s start with the bull case. Here are the reasons to buy ABC stock:

1. AmerisourceBergen is a major pharmaceutical distributor with close to $100 billion in annual revenue. Its size makes the firm a preferred partner among major drug manufacturers and many retail pharmacy customers.

2. Pharmaceutical spending will continue to grow robustly over the next several years, given demographic shifts and the expansion of medical insurance coverage to the currently uninsured.

3. As specialty drug spending continues to increase, we believe distributors have an opportunity to capture value from this niche market and improve both top- and bottom-line results.

4. ABC quarterly revenue growth was 4.90%, higher than the industry and sector average revenue growth (2.12% and 2.50%, respectively). See ABC revenue growth chart.

5. ABC profitability is improving. The YoY profit margin change was 0.75 percentage points. See ABC profitability chart.

6. ABC forward dividend yield is 1.95%, higher than the industry (0.46%) and sector (0.11%) forward dividend yields. See ABC forward dividend chart.

7. ABC average analyst rating is Buy. See ABC analyst rating chart.

8. ABC average analyst price target ($95.44) is above its current price ($81.96). See ABC price target chart.

Now that you understand the bull case, let’s look at the reasons to sell ABC stock (i.e., the bear case):

1. Profit margins for AmerisourceBergen are razor-thin, making any significant pricing pressure a major headwind.

2. In an effort to procure a cheaper supply of generic product, AmerisourceBergen has partnered with Walgreens to enhance its negotiating power and fixed-cost scale. If this partnership fails, the outlook for future revenue and profit growth will take a hit.

3. Sales volume could take a material hit if the U.S. federal government were to implement scaled-back healthcare legislation.

4. ABC Price/Book ratio is 5.64, and it’s high compared to its industry peers’ P/B ratios. See ABC forward Price/Book ratio chart.

5. ABC short share of float is 5.24%. The stock is much more frequently shorted than the average industry, sector or S&P 500 stock. See ABC short share of float chart.

6. ABC short interest (days to cover the shorts) ratio is 5.9. The stock garners more short interest than the average industry, sector or S&P 500 stock. See ABC short interest ratio chart.

Now let's look at the key statistics for ABC:

Metrics ABC
Price $89.66
Average Price Target / Upside $95.44 / 6.45%
Average Analyst Rating Buy
Industry Medical Distribution
Sector Healthcare
Number of Employees 21,000
Market Cap $17.00B
Forward P/E Ratio 10.75
Price/Book Ratio 0.1
PEG 1.44
Revenue (TTM) $177.25B
YoY Quarterly Revenue Growth 4.9%
Profit Margin 0.54%

What are your thoughts on ABC?

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