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AmerisourceBergen's shares will soon reach $105

US drug distributor AmerisourceBergen recently issued solid financial report for its fiscal year 2015 first quarter ended December 31, 2014. Revenues increased 15.1% y-o-y to $33.6 bn easily beating consensus estimate of $31.6 bn. The growth was driven by the onboarding of substantial new business from Walgreens and strong sales of hepatitis C drugs. Operating income jumped 35% y-o-y to $435.6 mn, and operating margin improved 15 basis points to 1.3%. Adjusted earnings per share surged 42.5% to $1.14 and were well ahead of analysts’ average forecast of $0.96.

AmerisourceBergen ended FQ4 with cash and cash equivalents of $2.3 bn, up from $1.8 bn at the end of the previous quarter. Long-term debt stood at $2 bn. The company spent $300 mn on share repurchases in the reported quarter; a quarterly dividend was 20 cents per share, with indicated dividend yield of 1.2%.

AmerisourceBergen improved its fiscal 2015 guidance and now expects adjusted EPS in the range of $4.45-4.55 (up 12-15% from fiscal 2014) compared with the prior projection of $4.36-4.50. The company also expects revenues to grow around 10-11% in fiscal 2015, up from the earlier projection of a 7-8% increase. Notebly, in January, AmerisourceBergen signed an agreement to acquire MWI Veterinary Supply, a leading animal health distribution company in the US, and the updated guidance does not include the impact of this transaction. However, according to management, the MWI acquisition will add 8 cents to adjusted EPS in the second half of fiscal 2015.

In 2015, AmerisourceBergen should benefit from a full year of the generic business with Walgreen, which should positively impact results. Moreover, the MWI acquisition will expand the company’s existing pharmaceutical distribution & services businesses into the attractive animal health market, which holds huge potential at the moment.

AmerisourceBergen’s shares, I believe, are attractive for medium-term investment, with target price of USD 105.