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Reaffirming Our Narrow Moat and Negative Moat Trend on the Big Three U.S. Pharma Wholesalers

Equity Analyst Dylan Finley

Dylan Finley, CFA Equity Analyst

Analyst Note

| Dylan Finley, CFA | Sep 13, 2021

After taking a refreshed look at the U.S. pharmaceutical wholesale industry, we are reaffirming our narrow moat and negative moat trend ratings, and we have revised our fair value estimates--with AmerisourceBergen at $142 per share (previously $135), McKesson at $210 per share (previously $198), and Cardinal Health at $55 per share (previously $60). These revisions reflect slightly higher revenue growth assumptions overall, a reworking of our gross and operating margin estimates, our updated long-term U.S. tax rate estimate of 26%, and the financial impact associated with a looming multi-billion dollar opioid settlement.

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Company Profile

Business Description

AmerisourceBergen is a leading pharmaceutical wholesaler engaged in the sourcing and distribution of branded, generic, and specialty pharmaceutical products to pharmacies (retail chains, independent, and mail-order), hospital networks, and healthcare providers. Along with McKesson and Cardinal Health, the three compose well over 90% of the U.S. pharmaceutical wholesale industry. Through bolt-on acquisitions, the company has expanded into international wholesale in Europe (Alliance Healthcare) and South America (Profarma). AmerisourceBergen provides commercialization services for manufacturers of pharmaceuticals and medical devices, global specialty drug logistics (World Courier), and animal health product distribution (MWI Animal Health).

Contact

1300 Morris Drive
Chesterbrook, PA, 19087-5594

T +1 610 727-7000

bmurphy@amerisourcebergen.com

www.amerisourcebergen.com

Sector Healthcare

Industry Medical Distribution

Most Recent Earnings Jun 30, 2021

Fiscal Year End Sep 30, 2021

Stock Type Classic Growth

Employees 22,000

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