ABC’s Fundamentals Remain Strong

Analysts at Citigroup maintain their "buy" rating on AmerisourceBergen Corp ABC, while raising their estimates for the company. The target price for ABC has been raised from $36 to $38. After a meeting with David Yost (CEO), Michael DiCandilo (CFO), and Steven Collis (President of Drug Business) at the company’s headquarters at Chesterbrook, analysts at Citigroup say, “Management remains optimistic of its business fundamentals, reiterating its LT earnings growth in “mid-teens” range, with IMS’ 3%-5% revenue growth continuing to be the ‘right zip code’ for the company.” “ABC remains laser focused on operating expenses. The firm lowered absolute operating expenses in its last full fiscal year 2009 (Sept-end) and as of F2Q10 earnings call guided to 1%-3% growth vs. our 1.3% growth, leading to operating expense margin of 1.56%. Mgmt emphasized that in keeping with its “customer efficiency and cost effectiveness” (CE2) philosophy, it has a healthy pipeline of projects to lower costs as percent of revenues,” the analysts add. Citigroup has raised its EPS estimate for 2010 from $2.12 to $2.15. More Analyst Ratings here