Shares of Cencora, Inc. COR scaled a new 52-week high of $240.86 on Mar 18, 2024, before closing the session slightly lower at $239.31.

Over the past year, this Zacks Rank #2 (Buy) stock has gained 55.5% compared with a 5.9% rise of the industry and the S&P 500’s 30.4% growth.

Over the past five years, the company registered earnings growth of 13% compared with the industry’s 8.9% rise. The company’s long-term expected growth rate of 9.8% compares with the industry’s growth projection of 16.2%. Cencora’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average surprise being 6.7%.

Cencora is witnessing an upward trend in its stock price, prompted by its strength in the U.S. Healthcare Solutions business. The optimism led by a solid first-quarter fiscal 2024 performance and generics and new product launches are expected to contribute further. However, stiff competition and concerns regarding contract renewals persist.

Image Source: Zacks Investment Research

Let’s delve deeper.

Key Growth Drivers

Generics and New Product Launches: Cencora is expected to benefit from generics growth in the long run, raising investors’ optimism. Cencora is well-positioned to help ensure products get to market as efficiently as possible. Strong organic growth rates in the U.S. pharmaceutical market, improving patient access to care, improved economic conditions and population demographics, introduction of new innovative drugs like hepatitis C drugs, and a continued good brand pricing environment should drive growth. Moreover, the company’s focus on specialty drugs has boded well.

Strength in U.S. Healthcare Solutions Business: The U.S. Healthcare Solutions reportable segment distributes a comprehensive offering of brand-name, specialty brand-name and generic pharmaceuticals, among others. The U.S. Healthcare Solutions reportable segment also provides pharmaceutical distribution and additional services to physicians who specialize in a variety of disease states, especially oncology. Through its animal health business, the U.S. Healthcare Solutions reportable segment sells pharmaceuticals, vaccines, parasiticides and various other products to customers in both the companion animal and production animal markets.

In fourth-quarter fiscal 2024, revenues in this segment were driven by unit volume growth, including increased sales of products labeled for diabetes and weight loss in the GLP-1 class, increased sales of specialty products to physician practices and health systems, and increased sales of COVID-19 vaccines.