ABC Is Well-Levered To The Generic Wave

Analysts at Goldman Sachs reiterate their "buy" rating on AmerisourceBergen Corp ABC, while reducing their estimates for the company. The target price for ABC is set to $39. Goldman Sachs says, “Post AmerisourceBergen’s F’3Q2010 earnings call and weakness today, we remain buyers of shares. We believe the recent pullback (ABC down 9% in last five trading days vs. S&P up 3%) is overdone, particularly given: (1) better visibility into F’2011 with unexpected introduction of guidance of $2.28-$2.36 (vs. Street at $2.31); (2) upcoming generic schedule where we see upside to numbers driven from higher profit launches; and (3) attractive valuation with shares trading at 11.7X our CY2011 EPS against what we see as long-term 15% 3-year earnings CAGR. Our fundamental thesis remains intact; in the near-term we believe ABC is well-levered to the generic wave given its customer base, while longer-term we see its specialty distribution segment as the most attractive secondary business among the distributors.” Goldman Sachs has lowered its EPS estimate for Q4 from $0.49 to $0.46. More Analyst Ratings here