Is AmerisourceBergen a Good Investment?

PHOTO CREDIT: AmerisourceBergen

OVERVIEW

AmerisourceBergen Corporation is a company based in the United States. The company distributes pharmaceutical products like medications, equipment, and blood plasma around the world. In addition to this, the company offers many other healthcare-related services for its customers. The company was founded in 1985.

Why You Should?

1. AmerisourceBergen is a very safe investment in an investor’s portfolio due to the essential nature of the products and services that it offers to its customers. In other words, the company will report stable sales through a rough economic time. This will benefit investors in the company.
2. AmerisourceBergen is also a good reopening play in an investor’s portfolio. The company has had to deal with many headwinds during the pandemic. For example, people reduced their visits to hospitals and pharmacies due to the pandemic. Once this pandemic is over, the company will continue to see better performances.
3. The company has seen rising revenues over the past couple of financial years due to the reasons mentioned above (though profits have been inconsistent). This has helped the company grow across all of its markets and has also benefited investors in the company. In the financial year of 2020, the company reported revenues of around 189.89 billion and a loss of around 3.41 billion. In the financial year of 2019, the company reported lower revenues of around 179.59 billion but a profit of around 855 million.

PHOTO CREDIT: Yahoo Finance

Why You Should Not?

1. The company faces tough competition in the medical supplies distribution sector. Some of these competitors include McKesson and Cardinal Health (along with many other smaller distributors). This competition might hurt the company and its investors in the future.
2. The company might continue to see its bottom line get negatively impacted because of the political environment. Both political parties want to find ways to reduce the cost of healthcare in the country. If there is legislation that gets passed, investors should expect the stock price to fall in the short to mid-term.
3. The entire medical distribution sector faces low-profit margins. AmerisourceBergen is not immune from this as they have always had fairly small bottom lines (profits) and massive top lines (revenues). However, any headwind which causes more costs for the company might hurt both the company and its investors.

MY OPINION

I think that AmerisourceBergen is a decent long-term investment due to its position as a good reopening play and a safe investment option for investors as well as its history of rising revenues. However, tough competition, a negative political environment, and a very small profit margin might hurt the company and its investors in the future.