Cencora shares plunge 6.7% on revenue miss despite earnings beat
Pharmaceutical distributor raises full-year guidance, but investors focus on quarterly sales shortfall
Cencora shares tumbled 6.7% to $337.62 in Wednesday trading after the pharmaceutical distribution giant reported first-quarter revenue that fell short of analyst expectations, overshadowing an earnings per share beat and raised full-year guidance.
The company, formerly known as AmerisourceBergen until completing its rebranding in 2023, reported revenue of $85.9 billion for its fiscal first quarter, missing the consensus estimate of $86.02 billion. The revenue represented 5.5% year-over-year growth but proved insufficient for investors in a stock trading at a premium valuation.
Despite the sales shortfall, Cencora delivered adjusted diluted earnings per share of $4.08, beating analyst forecasts of $4.04. The company also raised its fiscal 2026 guidance, a move that typically would bolster investor confidence in growth-focused pharmaceutical distributors.
The market's harsh reaction highlights growing sensitivity to revenue execution among healthcare services companies, particularly those trading at elevated multiples. Cencora currently trades at approximately 20 times forward earnings, with a market capitalization of $69.7 billion.
"Investors are focusing on the top-line miss because revenue growth is the primary driver for pharmaceutical distributors, especially given the margin pressure in the industry," said analysts covering the sector. "When you're trading at premium valuations, the market demands execution on all fronts."
Cencora's U.S. Healthcare Solutions segment emerged as a bright spot, with operating income growing 21% year-over-year. The strong performance in this core business segment underscores the company's ability to capture market share in the complex U.S. healthcare supply chain.
The company raised its full-year fiscal 2026 guidance, indicating management's confidence in sustained growth momentum despite the quarterly revenue stumble. However, investors appeared focused on the immediate execution gap rather than the optimistic outlook.
Pharmaceutical distribution has faced increasing margin pressure in recent years due to complex rebate structures, rising generic penetration, and consolidation among healthcare providers. Cencora has been working to diversify its revenue streams through its global healthcare solutions platform, which provides specialty pharmaceutical distribution and clinical services.
The stock decline extends Cencora's recent volatility, with shares now trading below their 50-day moving average of $348.57. The 52-week high of $377.54 remains well above current levels, suggesting room for recovery if the company can demonstrate consistent revenue growth in subsequent quarters.
Analysts remain broadly positive on the stock, with 16 of 17 analysts rating it a buy or strong buy. The consensus price target of $399.07 implies significant upside potential from current levels, assuming the company can address investor concerns about revenue momentum.
Cencora's quarterly results come at a critical juncture for the pharmaceutical distribution industry, as major players navigate evolving healthcare policies, changing drug pricing dynamics, and increasing demand for specialty medications. The company's ability to leverage its scale and technology investments will be crucial to delivering the revenue growth that investors expect.
With the full-year guidance raise indicating management's confidence in the underlying business trajectory, the question for investors will be whether the first-quarter revenue miss represents a temporary stumble or a more concerning trend in the competitive healthcare distribution landscape.