Reasons to Retain AmerisourceBergen (ABC) in Your Portfolio

AmerisourceBergen Corporation ABC is well-poised for growth on the back of its robust U.S. Healthcare Solutions business and product launches. Intense competition remains a concern.

Shares of this currently Zacks Rank #3 (Hold) player have gained 3.3% against the industrys decline of 23.2% in a years time. The S&P 500 Index has fallen 13.9% in the same time frame.

AmerisourceBergen, with a market capitalization of $31.2 billion, is one of the worlds largest pharmaceutical services companies, focused on providing drug distribution and related services to reduce health care costs and improve patient outcomes. ABCs earnings are anticipated to improve 8.2% over the next five years. It beat on earnings in three of the trailing four quarters and missed the mark once, the average surprise being 2.63%.

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Whats Driving Growth?

It is worth mentioning that AmerisourceBergen made a strategic evaluation of its reporting structure to represent its expanded international presence following the June 2021 buyout of Alliance Healthcare. As a result, starting the first quarter of fiscal 2022, ABC realigned its reporting structure under two reportable segments, namely U.S. Healthcare Solutions and International Healthcare Solutions.

Per the segment realignment, U.S. Healthcare Solutions consists of the legacy Pharmaceutical Distribution Services reportable segment (excluding Profarma), MWI Animal Health, Xcenda, Lash Group and ICS 3PL. The segment benefits from increasing volume and an expanding customer base. Strong organic growth rates in the U.S. pharmaceutical market, improving patient access to medical care, enhanced economic conditions and population demographics are likely to favor the segment in the quarters to come.