AmerisourceBergen (ABC) Stock Reinstated With 'Outperform' Rating at Credit Suisse

AmerisourceBergen (ABC) stock was reinstated with an 'outperform' rating at Credit Suisse on Tuesday.
By Amanda Albright ,

NEW YORK (TheStreet) -- CreditSuisse reinstated coverage on AmerisourceBergen  (ABC) - Get Report stock with an "outperform" rating on Tuesday morning. 

The Chesterbrook, PA-based company, which is a pharmaceutical sourcing and distribution service provider, was reinstated after its $2.58 billion acquisition of PharMEDium and strong 2015 fourth quarter earnings results.

AmerisourceBergen's acquisition of PharMEDium, which was completed earlier this month, was expected to add 22 cents per share to 26 cents per share to the company's fiscal 2016 adjusted earnings.  

Credit Suisse set a $121 price target on AmerisourceBergen stock. 

Credit Suisse analysts raised their fiscal 2016 earnings projections for AmerisourceBergen to $5.82 per share from $5.62 per share.

Shares of AmerisourceBergen were up by 0.82% to $98.10 in early-morning trading on Tuesday. 

Separately, TheStreet Ratings team rates AMERISOURCEBERGEN CORP as a Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:

We rate AMERISOURCEBERGEN CORP (ABC) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its revenue growth, good cash flow from operations and solid stock price performance. However, as a counter to these strengths, we also find weaknesses including generally higher debt management risk, disappointing return on equity and poor profit margins.

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • ABC's revenue growth has slightly outpaced the industry average of 10.2%. Since the same quarter one year prior, revenues rose by 12.3%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Looking at where the stock is today compared to one year ago, we find that it is not only higher, but it has also clearly outperformed the rise in the S&P 500 over the same period. Although other factors naturally played a role, the company's strong earnings growth was key. Looking ahead, our view is that this company's fundamentals will not have much impact in either direction, allowing the stock to generally move up or down based on the push and pull of the broad market.
  • AMERISOURCEBERGEN CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, AMERISOURCEBERGEN CORP swung to a loss, reporting -$0.79 versus $1.20 in the prior year. This year, the market expects an improvement in earnings ($5.83 versus -$0.79).
  • Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Health Care Providers & Services industry and the overall market, AMERISOURCEBERGEN CORP's return on equity significantly trails that of both the industry average and the S&P 500.
  • The gross profit margin for AMERISOURCEBERGEN CORP is currently extremely low, coming in at 2.74%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 1.02% trails that of the industry average.
  • You can view the full analysis from the report here: ABC

Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of Jim Cramer, TheStreet or any of its contributors.

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