On Wednesday, Evercore ISI adjusted its stock price target for Cencora Inc (NYSE: COR), a company listed on the New York Stock Exchange, to $260 from the previous $270. Despite this reduction, the firm continues to hold an Outperform rating on the stock. The adjustment comes after Cencora reported its second-quarter financial results, which exceeded expectations in both U.S. and international segments.
The detailed earnings report clarified some initial uncertainties regarding the company's growth rate excluding COVID-19 impacts. Analysis of the separate components revealed that the U.S. adjusted operating profit growth for the second quarter, excluding COVID-19 effects, was approximately 11%, which is consistent with the first quarter's growth of 12%.
Projections for the second half of the year suggest an 8-12% growth rate, with a midpoint of around 10%, indicating a solid continuation of adjusted operating income growth into the latter half of 2024.
Evercore ISI has slightly revised its fiscal year 2024 earnings per share (EPS) estimates for Cencora, taking into account the higher adjusted operating income, which is somewhat offset by higher non-operating items. The firm's long-term financial outlook for Cencora remains positive, with an expectation of continued outperformance in the market.
The new stock price target of $260 is based on a 13 times multiple of the calendar year 2024 EBITDA or a 19 times price-to-earnings ratio, which reflects approximately a 9% discount compared to the S&P index. This valuation underscores Evercore ISI's confidence in Cencora's sustained financial performance and its potential for growth despite the revised target.
InvestingPro Insights
Recent data from InvestingPro provides a comprehensive financial snapshot of Cencora Inc (NYSE: COR). With a market capitalization of $45.68 billion, the company is a substantial player in its industry.
The P/E ratio stands at a high 24.73, which suggests that investors are expecting higher earnings growth in the future compared to the market average. Still, the adjusted P/E ratio for the last twelve months as of Q1 2024 is slightly lower at 23.6, indicating a possible adjustment in earnings expectations.
InvestingPro Tips highlight that Cencora has a track record of raising its dividend for 19 consecutive years, demonstrating a commitment to returning value to shareholders. Moreover, the company is noted to be trading at a low revenue valuation multiple, which could suggest an attractive entry point for investors considering the strength of its financials. On the flip side, the company's gross profit margin stands at 3.37%, which is relatively low and may warrant attention.
For investors seeking to delve deeper into Cencora's financial health, there are additional InvestingPro Tips available, offering insights into aspects such as share buybacks, cash flow sustainability, and debt management. For a more detailed analysis, investors can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. In total, there are 17 more InvestingPro Tips that can be accessed, providing a thorough understanding of Cencora's financial and market position.
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