AmerisourceBergen Slammed

The drug services giant cites lower-than-expected inventory levels.
By TSC Staff ,

Updated from 8:20 a.m. EST

AmerisourceBergen

(ABC) - Get Report

shares plunged early Monday after the drug services company lowered its 2005 earnings outlook.

The company now sees EPS from continuing operations of $3.10 to $3.50, down from its previous guidance of $4 to $4.10.

The company cited "reduced buy-side profits resulting from lower-than-anticipated inventory levels associated with its ongoing transition to fee-for-service contracts with branded pharmaceutical manufacturers."

For the current quarter, AmerisourceBergen forecast EPS from continuing operations of 75 cents and 85 cents.

The consensus forecasts are $3.79 and $1.10 a share, respectively, based on Thomson First Call's survey.

AmerisourceBergen expects inventory during the March through September fiscal 2005 quarters to be in the low-to-mid-$4 billion range, down from $5.2 billion at the end of the December fiscal 2004 quarter.

The company, however, said it remains optimistic about fiscal 2006 and beyond. EPS for 2006 is seen at $3.60 to $4.40. "The approximately $20 billion in branded products that are scheduled to convert to generics next year combined with the rollout of our enhanced generic program in April 2005 should improve future margins," the company said. Analysts expect $4.42 a share.

Shares were down $6.11, or 10%, at $55.00 in premarket trading.

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