AmerisourceBergen (ABC) Rewards Investors With Dividend Hike

AmerisourceBergen Corporation’s ABC board of directors has approved a 4% hike in cash dividend per share. The revised dividend of 38 cents will be paid on Dec 4, 2017 to shareholders of record as of Nov 20, 2017.

Further, we believe that AmerisourceBergen will benefit from generics growth in the long run. We note that the company is well positioned to ensure that products will reach the market and that patients will have access to traditional and complex new therapies.

 

 

Strong organic growth rates in the U.S. pharmaceutical market, improving patient access to care, improved economic conditions and population demographics, introduction of new innovative drugs like hepatitis C drugs, and a persistent brand pricing environment should drive growth. Moreover, the company’s focus on specialty drugs bodes well.

On the flip side, cutthroat competition in the niche space is an additional concern. AmerisourceBergen operates in a highly competitive pharmaceutical distribution and related health-care services market. The company’s primary competitors are national generic and regional distributors. The space is witnessing consolidation of customers and manufacturers, globalization and increasing quality along with regulatory challenges. The company also faces threats from manufacturers, chain drugstores, specialty distributors and packaging and health care technology companies.

The company, based in Chesterbrook, PA, is one of the world’s largest pharmaceutical services companies, which focuses on providing drug distribution and related services to reduce health care costs and improve patient outcomes.

Zacks Rank & Key Picks

AmerisourceBergen currently has a Zacks Rank #3 (Hold).

A few better-ranked medical stocks are PetMed Express, Inc. PETS, Luminex Corporation LMNX and Intuitive Surgical, Inc. ISRG. While PetMed and Luminex sport a Zacks Rank #1 (Strong Buy), Intuitive Surgical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

PetMed reported earnings per share of 43 cents in the second quarter of fiscal 2018, up 79.2% from the year-ago quarter’s 24 cents. Also, gross margin expanded 548 bps year over year to 35.2% in the reported quarter.

Luminex reported adjusted earnings per share of 19 cents in the third quarter of 2017, up 216.7% year over year. The company’s revenues in the quarter increased almost 4.1% year over year to $74.1 million.

Intuitive Surgical posted adjusted earnings of $2.77 per share in the third quarter of 2017, up 34.5% on a year-over-year basis. Also, revenues increased 18% year over year to $806.1 million.

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