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Drug wholesale company AmerisourceBergen (ABC) - Get AmerisourceBergen Corporation Report has mounted a near-mythic revival this year after the stock lost 23.5% in 2016.

After registering one of the worst performances of any S&P 500 constituent in 2016, the stock is steadily gaining traction in 2017 on the back of a Q1 earnings beat. In addition, analysts expect modest earnings growth for the remainder of the year.

In 2001, AmeriSource Health merged with Bergen Brunswig to form AmerisourceBergen. ABC operates 32 pharmaceutical distribution centers in North America bringing in nearly $150 billion in annual sales.

After the U.S. Presidential election ended, investors started buying ABC shares. That new-found demand is helping AmerisourceBergen out-perform peers like Cardinal Health (CAH) - Get Cardinal Health, Inc. Report up 9.6%, McKesson Corporation (MCK) - Get McKesson Corporation (MCK) Report up 3.3% and Express Scripts (ESRX) up only 1.2% year-to-date.

Other factors boosting the stock include the settlement of the West Virginia painkiller shipment lawsuit, and the company's rejection of a $74-per-share offer by TRC Capital.

The first-quarter earnings report was also well received. AmerisourceBergen clocked revenues of $38.2 billion, which increased 4% year-over-year but missed analysts' expectations by $800 million. On its bottom-line, ABC's earnings per share (EPS) of $1.36 beat analysts' expectations by 13 cents.

The company's outlook for fiscal 2017 projects revenue to increase 6.5% to 8% over the previous year. EPS guidance was raised 10 cents--from a $5.63-$5.88 range to a $5.72-$5.92 range. This implies a growth of 2% to 5% against the last fiscal year.

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With AmerisourceBergen continuing to lead the market in specialty products and pharmaceutical services, a turnaround was very likely.

Further, recent acquisitions of MWI Animal Health and PharMEDium have played out well so far. The company's portfolio of integrated services and value delivery for pharmaceutical manufacturers helped it cement strong market positioning.

Finally, the fear of President Trump coming down harshly on low-margin drug wholesale firms is over for now. Instead of targeting wholesalers, Trump has chosen to focus his energy on generic drug manufacturing and U.S. unemployment. This could be a reason why organizations like AmerisourceBergen, which trades at 15 times forward earnings, are no longer in Trump's crosshairs.

The company also sports a modest 1.6% dividend yield which it has increased every year since 2005. Investors can expect steady growth over the long-term and the company's dividend track record is just the icing on the cake.


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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.