| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 175.14 | -41 |
| Intrinsic value (DCF) | 353.02 | 20 |
| Graham-Dodd Method | n/a | |
| Graham Formula | 150.53 | -49 |
Cencora, Inc. (NYSE: COR), formerly known as AmerisourceBergen Corporation, is a leading global pharmaceutical sourcing and distribution powerhouse headquartered in Conshohocken, Pennsylvania. Operating in the $500B+ medical distribution industry, Cencora connects biopharmaceutical manufacturers with healthcare providers through its U.S. and International Healthcare Solutions segments. The company serves a vast network including 85% of U.S. hospitals, 90% of oncology practices, and 25,000+ independent pharmacies, while also providing value-added services like pharmacy management, clinical trial support, and specialty logistics. With $294B in annual revenue and a $56.7B market cap, Cencora plays a critical role in the healthcare supply chain, distributing 20% of all U.S. pharmaceuticals. Its international footprint spans Europe with pharmaceutical wholesale and commercialization services. The company's diversified offerings—from plasma products to animal health pharmaceuticals—position it as an essential infrastructure player in global healthcare delivery, benefiting from stable demand drivers including aging populations and specialty drug growth.
Cencora presents a compelling infrastructure-like investment in healthcare with stable cash flows (3.5B operating cash flow) and defensive characteristics (beta 0.6). The company benefits from scale advantages in pharmaceutical distribution (20% U.S. market share) and growing specialty drug distribution (40% of revenue). However, investors should note razor-thin 0.5% net margins (1.5B net income on 294B revenue) and sensitivity to drug pricing reforms. The 2.16/share dividend (1.5% yield) is well-covered, and debt appears manageable at 4.4B (1.5x EBITDA). Growth opportunities exist in higher-margin services like clinical trial support and international expansion, though the capital-intensive model requires monitoring working capital cycles. The recent rebrand to Cencora signals strategic evolution beyond core distribution.
Cencora operates in a highly consolidated pharmaceutical distribution oligopoly where scale, logistics networks, and manufacturer relationships determine competitive advantage. The company's primary edge stems from its #2 U.S. market position (behind MCK) with particular strength in specialty distribution (oncology, rare diseases) accounting for 40% of revenue. Its 8,000+ manufacturer relationships and proprietary logistics infrastructure (including cold chain capabilities) create high switching costs. The 2023 rebrand to Cencora reflects strategic emphasis on higher-margin services like clinical trial logistics and data analytics, differentiating from pure-play distributors. However, the company faces margin pressure from customer consolidation (growing PBM power) and lacks the vertical integration of CVS/Caremark. Internationally, Cencora trails Cardinal Health in European reach but leads in commercialization services. The capital-intensive model creates barriers to entry but also limits ROIC (8-10% range). Competitive threats include manufacturer direct-to-provider distribution models and Amazon Pharmacy's logistics capabilities, though Cencora's clinical support services provide some insulation. The company's 2024 guidance suggests share gains in biologics distribution, an area with less pricing transparency than traditional generics.