Cencora, Inc. (NYSE:COR) experienced a notable increase in its stock price, rising by 9.1% during trading on Thursday, following the release of its latest earnings report. The stock reached a peak of $359.10 before closing at $359.90. Approximately 383,655 shares changed hands, reflecting a decline of 68% compared to the average daily trading volume of 1,195,642 shares. This uptick comes after the company’s stock closed at $329.97 in the previous session.
The earnings report revealed that Cencora achieved a $4.08 earnings per share (EPS) for the quarter, surpassing analysts’ expectations of $4.04 by $0.04. Despite this positive news, the company’s revenue of $85.93 billion fell slightly short of the anticipated $86.12 billion, although it still represented a year-over-year increase of 5.5%. Last year, during the same period, Cencora reported an EPS of $3.73.
Dividend Announcement and Management Outlook
In conjunction with its earnings report, Cencora announced a quarterly dividend of $0.60 per share, scheduled for payment on March 2, 2024. Shareholders of record as of February 13, 2024 will be eligible to receive this dividend, which translates to an annualized payout of $2.40 and a dividend yield of 0.7%. The company currently maintains a dividend payout ratio of 30.19%.
Management expressed optimism regarding the company’s financial outlook, raising its fiscal 2026 operating income growth targets to between 11.5% and 13.5%. This adjustment reflects the integration of the OneOncology acquisition, expected to enhance revenue and margin expansion in the medium term.
The completion of the OneOncology acquisition has been highlighted as a strategic catalyst for growth, particularly in the specialty oncology segment, which is anticipated to drive higher volumes. Analysts have responded positively to these developments, with several upgrading their ratings on Cencora stock.
Market Reactions and Analyst Ratings
Despite the increase in stock price, market reactions were mixed following the earnings announcement. Some analysts noted that the slight revenue miss contributed to intra-day selling, emphasizing a cautious sentiment among investors who favor stronger top-line results. Cencora’s management is aware that any failure to demonstrate sales acceleration in the upcoming quarters could maintain a subdued market sentiment.
Recent analyst reports reflect a generally positive outlook, with Mizuho raising its price target from $340.00 to $380.00 and issuing an “outperform” rating. Jefferies Financial Group upgraded Cencora from “underperform” to “buy,” while Barclays initiated coverage with an “overweight” rating and a price target of $400.00. Currently, one analyst rates the stock as a “Strong Buy,” nine as “Buy,” and three as “Hold,” leading to a consensus rating of “Moderate Buy” with a target price of $394.75.
Insider transactions have also garnered attention, with Executive Vice President Silvana Battaglia selling 1,677 shares on December 19 at an average price of $345.00. This sale reduced her ownership by 8.19%. Additionally, CEO Robert P. Mauch sold 5,096 shares at an average price of $366.64 on November 18, decreasing his position by 7.19%.
Cencora remains a significant player in the healthcare services and pharmaceutical distribution sector, with a market capitalization of $70.07 billion. The company’s operations encompass wholesale drug distribution, specialty drug distribution, and the management of specialty pharmacies, which are essential for supporting complex and temperature-sensitive therapies.
As Cencora continues to navigate the evolving landscape of the pharmaceutical industry, its performance in the coming quarters will be closely monitored by investors and analysts alike.
