ABC - Embedded Expectations Analysis - 2019 01 25
AmerisourceBergen Corporation (ABC:USA) currently trades near recent averages relative to UAFRS-based (Uniform) Earnings, with a 16.4x Uniform P/E, implying bearish expectations for the firm. Additionally, management is concerned about operating segment growth, profitability, generic prices, and production limitationsSpecifically, management may lack confidence in their ability to increase operating segment growth and may be concerned about their ability to sustain profitability. Additionally, they may be exaggerating their ability to participate in new therapies and capitalize on generic price changes. Moreover, they may be overstating PharMEDium's ability to deliver safe and high-quality products to customers, and may have concerns about their brand inflation level. Finally, management may be concerned about production limitations, and may be overstating their focus on share repurchases
AmerisourceBergen is a pharmaceutical sourcing and distribution services company. The company's Pharmaceutical Distribution Services reportable segment provides pharmaceutical distribution and additional services to physicians who focus on a variety of disease states, especially oncology, and to other healthcare providers, including hospitals and dialysis clinics. Additionally, this segment provides data analytics, outcomes research, and additional services for biotechnology and pharmaceutical manufacturers. This segment also provides pharmacy management, staffing and additional consulting services, and supply management software to a variety of retail and institutional healthcare providers.
In 2009, just as the dust was settling from the last major equity and credit market crises, we launched a boutique research firm with the intention of breaking Wall Street’s biases and broken incentives:
- GAAP and IFRS have failed to provide rules for reliable financial statement reporting
- Stock analyst recommendations are not grounded in disciplined financial analysis
- Credit agencies have been set up to grossly fail in their responsibilities to investors and the public markets
- Utter lack of willingness of major research firms to employ the the most advanced forensic analysis available
We sought to provide investors and company analysts with a source of information that changed all that.
Many years later, our business model remains because little has changed on Wall Street.
- Corporate credit ratings remain years behind the fundamental underpinnings of company performance
- Stock analysts continue to make recommendations with deeply inherent biases
- Research firms have failed to break down the walls between credit, equity, and macroeconomic research
- The governing accounting bodies have created more leeway for mis-estimates and mis-classifications as financials have become unwieldy and overwhelming
The integrity of Valens Research is founded in our disciplined processes and analytics. No “star” analysts. No corporate advisory relationships. No-nonsense opinions and recommendations.
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