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ABC

AmerisourceBergen

$85.01

-1.46 (-1.69%)

, CAH

Cardinal Health

$44.16

-1.13 (-2.50%)

13:20
06/15/19
06/15
13:20
06/15/19
13:20

McKesson, Cardinal Health looking like bargains, Barron's says

Investors have halved the share prices of McKesson (MCK) and Cardinal Health (CAH) since June 2015, while AmerisourceBergen's (ABC) is down a third, as they face declining prices for generic drugs, hundreds of lawsuits accusing them of liability in the opioid crisis, and proposals out of Washington that some worry could upset their business models, Josh Nathan-Kazis writes in this week's edition of Barron's. But for long-term investors who can stomach the risks, there is an opportunity in this complex, little-understood corner of the health-care industry, he contends. Reference Link

ABC

AmerisourceBergen

$85.01

-1.46 (-1.69%)

CAH

Cardinal Health

$44.16

-1.13 (-2.50%)

MCK

McKesson

$133.19

-1.7 (-1.26%)

  • 23

    Jun

ABC AmerisourceBergen
$85.01

-1.46 (-1.69%)

04/10/19
BOFA
04/10/19
DOWNGRADE
BOFA
Underperform
AmerisourceBergen downgraded to Underperform from Buy at BofA/Merrill
BofA/Merrill analyst Michael Cherry downgraded AmerisourceBergen (ABC) two notches to Underperform from Buy citing group profit questions, lack of clarity with PharMEDium, and a reduction in multiple for peers Cardinal Health (CAH) and McKesson (MCK).
04/10/19
04/10/19
DOWNGRADE

Fly Intel: Top five analyst downgrades
Catch up on today's top five analyst downgrades with this list compiled by The Fly: 1. Apple (AAPL) downgraded to Reduce from Hold at HSBC with analyst Erwan Rambourg saying the returns from Apple's recent announcements, including the Apple News+ premium news subscription, the Apple Card in partnership with Goldman Sachs (GS), Apple Arcade games as part of the App store and video subscription Apple TV+, could "take some time to extract." 2. AmerisourceBergen (ABC) downgraded to In Line from Outperform at Evercore ISI with analyst Michael Cherry citing group profit questions, lack of clarity with PharMEDium, and a reduction in multiple for peers Cardinal Health (CAH) and McKesson (MCK). 3. Novartis (NVS) downgraded to Underweight from Equal Weight at Morgan Stanley with analyst Mark Purcell saying the spinoff of Alcon will put more attention on the generics risk Novartis faces in its pharma business. 4. TerraForm Power (TERP) downgraded to Sell from Neutral at Goldman Sachs with analyst Brian Lee saying that while the company is in the midst of an operational transition that may improve cash flow and dividend flexibility, the upside appears to be priced in. 5. Foot Locker (FL) assumed with a Neutral from Buy at Citi with analyst Paul Lejuez saying while Foot Locker has "tailwinds at its back" in North America with comps inflecting positively in Q4, the company still faces many of the same headwinds as other specialty retailers given its "significant" mall exposure and EBIT pressure from direct-to-consumer. This list is just a portion of The Fly's full analyst coverage. To see The Fly's full Street Research coverage, click here.
04/11/19
GUGG
04/11/19
INITIATION
GUGG
Buy
AmerisourceBergen initiated with a Buy at Guggenheim
05/14/19
RAJA
05/14/19
NO CHANGE
RAJA
Walgreens could target Amerisource, LabCorp if it seeks M&A, says Raymond James
Raymond James analyst John Ransom said he thinks that "the temptation" for Walgreens (WBA) to do "something" in terms of M&A will grow over time and the "something" it may consider could include either acquiring AmerisourceBergen (ABC) or LabCorp (LH). His analysis points to LabCorp being a less complicated, "but much less accretive," deal, said Ransom. Given Walgreens' existing ownership of about a 26% stake in AmerisourceBergen, he estimates 16% accretion from buying the company for $95 per share in cash if he assumes $500M of synergies and $2B of opioid fines financed with debt, the analyst tells investors. Though such a deal would make financial sense, he does not think investors would "be overly excited about the strategic upside," Ransom tells investors. While he argues that LabCorp "offers more strategic upside," such a hypothetical deal also has less financial benefit, according to Ransom.
CAH Cardinal Health
$44.16

-1.13 (-2.50%)

04/03/19
MSCO
04/03/19
NO CHANGE
MSCO
Morgan Stanley says Walgreens' reimbursement pressure points to distributor risk
Morgan Stanley analyst Ricky Goldwasser said the guidance cut made by Walgreens Boots Alliance (WBA) is due to the same "perfect storm of industry headwinds" addressed by CVS Health (CVS) earlier in the year, including increased reimbursement pressure, lower generic deflation, lower brand inflation and declining comparable sales in the front-end of the store. Though Walgreens management suggested reimbursement headwinds should normalize in fiscal 2020, Goldwasser said he could see more downside from continued reimbursement headwinds and structural changes if new rebate rule comes into play. He also views pharmacy reimbursement pressure as a leading indicator suggesting risk to distributors' sell side margins and earnings, including for AmerisourceBergen (ABC), which Goldwasser notes is part of the WBAD purchasing consortium. Other drug distributors include McKesson (MCK) and Cardinal Health (CAH).
04/17/19
GUGG
04/17/19
INITIATION
Target $72
GUGG
Neutral
Cardinal Health initiated with a Neutral at Guggenheim
Guggenheim initiated Cardinal Health with a Neutral and $72 price target.
04/17/19
GUGG
04/17/19
INITIATION
Target $51
GUGG
Neutral
Cardinal Health initiated with a Neutral at Guggenheim
Guggenheim initiated Cardinal Health with a Neutral rating and $51 price target.
04/17/19
GUGG
04/17/19
INITIATION
Target $51
GUGG
Neutral
Cardinal Health initiated with a Neutral at Guggenheim
Guggenheim analyst Glen Santangelo initiated Cardinal Health with a Neutral rating and a price target of $51. The analyst says that while the company is "operating in a difficult environment in both its Pharmaceutical and Medical segments", it is showing signs of stabilization operationally. Santangelo also warns however that Cardinal Health's upside potential will be limited as long as investors are focused on the "potential for unfavorable regulatory change and the implications of the ongoing opioid litigation."
MCK McKesson
$133.19

-1.7 (-1.26%)

01/17/19
UBSW
01/17/19
INITIATION
Target $134
UBSW
Neutral
McKesson initiated with a Neutral at UBS
UBS analyst Kevin Caliendo started McKesson with a Neutral rating and $134 price target.
03/04/19
BARD
03/04/19
NO CHANGE
BARD
Baird investigation finds Ohio, like many buyers, paying too much for drugs
In a research note titled "Major Confusion: Does This Pass Your Sniff Test?," Baird analyst Eric Coldwell details the interplay between Cardinal Health's (CAH) generic marketing company Major Pharmaceuticals and CVS Health (CVS) in Ohio. In Major's catalog is Omeprazole, a generic version of Prilosec, which is available without a subscription. CVS Caremark, which had majority share of pharmacy benefit management services in Ohio, didn't use Maximum Allowable Cost for the product, which led to the state of Ohio paying $6.74 per tablet, or 19 times the amount somebody without a subscription can buy it, Coldwell tells investors in a research note, citing his own investigation. Meanwhile, over the course of five quarters in Ohio, Major's volume market share went from less than 2% to nearly 60% while dollar market share went from 12% to 95%, adds the analyst. He asks, "How does this happen?" The state of Ohio, "like so many other buyers, feels like it is paying too much for drugs," concludes Coldwell.
04/02/19
WOLF
04/02/19
INITIATION
Target $127
WOLF
Outperform
McKesson initiated with an Outperform at Wolfe Research
Wolfe Research initiated McKesson with an Outperform and $127 price target citing compelling cash flow yields.

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