The company's extensive specialty distribution network is considered a competitive advantage, though it is somewhat balanced by the risks associated with potential Walgreens store closures. Mizuho (NYSE:MFG)'s valuation of Cencora is based on a 16 times price-to-earnings (P/E) multiple of the projected calendar year 2026 earnings per share (EPS) of $17.00. This forecast is slightly above the consensus estimate of $16.62 EPS.
Currently, the stock trades at a P/E ratio of 33.18x and is approaching its 52-week high of $253.27.The $280 price target stems from the P/E multiple, which aligns with that of Cencora's industry peer, McKesson Corporation (NYSE:MCK), and is just above the 15 times multiple projected for Cardinal Health (NYSE:CAH). Based on InvestingPro's Fair Value analysis, the stock appears to have additional upside potential.
The Outperform rating reflects Mizuho's expectation that Cencora's stock will perform well relative to the market or its sector in the foreseeable future, based on the outlined financial and industry factors. For deeper insights into Cencora's valuation and growth prospects, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
Cencora's relationship with its largest customer, Walgreens, is expected to remain stable, although there is a possibility of minor prescription volume and price reductions. Despite these potential challenges, Mizuho anticipates the company to maintain its growth trajectory. The company has demonstrated strong shareholder returns, with InvestingPro analysis showing 20 consecutive years of dividend increases and consistent dividend payments for 24 years.
The recent CEO transition to Bob Mauch is not expected to significantly alter Cencora's operational strategy, as Mauch has been a long-term member of the company's leadership team.
The company's extensive specialty distribution network is considered a competitive advantage, though it is somewhat balanced by the risks associated with potential Walgreens store closures. Mizuho's valuation of Cencora is based on a 16 times price-to-earnings (P/E) multiple of the projected calendar year 2026 earnings per share (EPS) of $17.00. This forecast is slightly above the consensus estimate of $16.62 EPS.
The $280 price target stems from the P/E multiple, which aligns with that of Cencora's industry peer, McKesson Corporation, and is just above the 15 times multiple projected for Cardinal Health. The Outperform rating reflects Mizuho's expectation that Cencora's stock will perform well relative to the market or its sector in the foreseeable future, based on the outlined financial and industry factors.
In other recent news, Cencora Inc. has reported substantial growth in its fiscal 2024 fourth quarter. The company's earnings and revenue increased by 15% year-over-year, with adjusted diluted EPS for Q4 rising by 17% to $3.34 and consolidated revenue reaching $79.1 billion. Additionally, Cencora announced the acquisition of Retina Consultants of America (RCA), expected to contribute approximately $0.35 to earnings in its first year.
BofA Securities recently revised its stock price target for Cencora, boosting it to $260 from $255, following Cencora's inaugural virtual Product Showcase event. The event featured new products that underscore Cencora's commitment to innovation and expansion beyond its foundational distribution services.
These are recent developments that reflect Cencora's strategic focus on specialty pharmaceuticals and infrastructure investments. The company's fiscal 2025 guidance projects an adjusted diluted EPS between $14.80 and $15.10 and a revenue growth of 7% to 9%. BofA Securities' analyst anticipates additional details on how these new programs will contribute to the company's performance.
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