by Sam Collins | April 1, 2013 1:38 am
AmerisourceBergen Corporation (NYSE:ABC) — This pharmaceutical services company that provides drug distribution primarily in the United States and Canada was included on our list of Top 6 Stocks to Buy for April, where I wrote:
“Because of its ability to profitably manage through the recent economic downturn and its ‘focus on generic and oncology drugs which are among the fastest growing and most profitable revenue drivers,’ according to S&P, this stock could command a higher-than-average price-to-earnings (P/E) ratio.
“Recently, ABC reached a $400 billion, 10-year distribution contract with Walgreen Co. (NYSE:WAG) and Alliance Boots. As a result, Goldman Sachs (NYSE:GS) and other analysts raised their earnings and price targets for the stock.
“On that news, the stock gapped through the resistance line of a well-defined bull channel on heavy volume. Since continuation gaps often close, traders should consider a buy under price of $49 for ABC with a trading target of $54. But holding this stock as a long-term investment could yield significantly better results.”
Last week, ABC announced that it would sell its Canadian pharmaceutical business for between $80 million and $100 million. As a result, the company has raised its earnings guidance for fiscal year 2013, ending in September, from $2.96-$3.06 to $3.04-$3.14. Analysts are increasing price targets for ABC, and our trading target is now revised to $57-$60 from $54. Cancel any open orders to buy ABC at $49 as previously suggested, and buy the stock at the market.
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