UPDATE: ISI Group Downgrades AmerisourceBergen to Neutral Following WAG Deal
In a report published Wednesday, ISI Group analyst Ross Muken downgraded the rating on AmerisourceBergen Corp. (NYSE: ABC) from Buy to Neutral, but slightly raised the price target from $53.00 to $54.00.
In the report, Muken noted, “Following today's move in AmerisourceBergen shares (up ~4%) following the strategic alliance with Walgreens, we are downgrading our rating on ABC shares from Buy to Neutral. We view the near-term upside to shares as accurately reflected in the stock, with the EPS accretion likely to be limited on a near-term basis as ABC ramps the business with Walgreens (likely pressuring FY1H'14 estimates). While downside in shares is fairly limited due to the valuation backstop from the WAG ownership, ABC's premium valuation relative to CAH and MCK will limit further multiple expansion opportunities. Our new price target of $54.00 represents ~9% total return to current trading levels.”
AmerisourceBergen Corp. closed on Tuesday at $50.06.
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