On Wednesday, Citi maintained a Buy rating on Cencora Inc (NYSE: COR) and raised the price target to $284 from $280. The adjustment comes after the company reported third-quarter earnings that surpassed expectations, particularly in the United States, where revenue and adjusted operating income (AOI) increased by 12% and 10% year-over-year, respectively. These figures exceeded Citi's projections by 2%.
The positive results in the U.S. market helped to balance softer international performance, where revenue and AOI growth were minimal at 0.1% and a decline of 4.1%, respectively, missing estimates by 4.5% and 6%. In response to the mixed results, Cencora has revised its financial guidance, raising the lower end of its U.S. revenue and AOI forecast by one percentage point, while reducing the upper end of its international guidance by the same margin.
The adjustment in guidance suggests a $16 million improvement in enterprise AOI at the midpoint. Furthermore, the company's earnings per share (EPS) forecast has seen a more significant increase of $0.15 at the midpoint. This boost is attributed to a $20 million improvement in net interest expense due to higher cash balances. Consequently, Cencora has also increased its free cash flow (FCF) guidance to a range of $2.5 to $3 billion.
The analyst noted that prior to the quarter, Cencora was favored as the top distributor pick, despite concerns surrounding the restructuring of WBA™. While the long-term impact of WBA™ remains uncertain, the latest financial results from Cencora are likely to begin easing investor worries. The improved financial outlook and strong performance in the domestic market have contributed to Citi's decision to raise the price target on Cencora shares.
In other recent news, Cencora Inc. has been in the spotlight due to a series of positive financial developments. The company's third-quarter results revealed a 12% year-over-year increase in U.S. revenue and a 10% rise in adjusted operating income. This strong performance led to upward revisions in the company's financial guidance, with significant enhancements to the earnings per share forecast and free cash flow guidance.
Citi and Baird, two well-regarded financial firms, have responded to these developments by raising their price targets for Cencora shares. Citi increased its target from $280 to $284, while Baird raised its target from $280 to $285. Both firms maintained positive ratings on the stock, citing Cencora's ability to navigate market challenges and capitalize on its strengths.
In addition, Cencora reported an 8% increase in revenue and a 9% rise in adjusted EPS during its Q2 2024 earnings call. The company also raised its adjusted operating income guidance for the full fiscal year. These are among the recent developments for Cencora, reflecting the company's strong performance and positive outlook.
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