Should you acquire AmerisourceBergen (NYSE:ABC) based on current technical indicators?

While some of us are excited about healthcare space, it makes sense to go over AmerisourceBergen in greater detail to make a better perception of its potential. As we have suggested previously, AmerisourceBergen is beginning its slip as investors shift to be more bearish due to the increased sector volatility. AmerisourceBergen almost mirrors the market. The company returns are correlated to returns on the market. As market fluctuates, the company is expected to follow. Strong forward indicators of the company may suggest signs of short-term price drift for investors. AmerisourceBergen is scheduled to announce its earnings tomorrow. The upcoming quarterly report is expected on the 4th of February 2021.
Published over a year ago
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Reviewed by Raphi Shpitalnik

AmerisourceBergen's average rating is Buy from 9 analysts. Do analysts base this consensus on technical analyses? We know that typical technical analysis utilizes price momentum, patterns, and trends looking at historical prices. It aims to identify signals based on AmerisourceBergen market sentiment investors' perception of the future value of AmerisourceBergen. Let us look at a few aspects of AmerisourceBergen technical analysis. Earning per share calculations of AmerisourceBergen is based on official Zacks consensus of 7 analysts regarding AmerisourceBergen's future annual earnings. Given the historical accuracy of 98.8%, the future earnings per share of the company is estimated to be 8.3725 with the lowest and highest values of 8.32 and 8.42, respectively. Please note that this consensus of annual earnings estimates for the firm is an estimate of EPS before non-recurring items and including employee stock options expenses.
Using predictive technical analysis, we can analyze different prices and returns patterns and diagnose historical swings to determine the real value of AmerisourceBergen. In general, sophisticated investors focus on analyzing AmerisourceBergen stock price patterns and their correlations with different microeconomic environment and drivers. They apply predictive analytics to build AmerisourceBergen's daily price indicators and compare them against related drivers such as momentum indicators and various other types of predictive indicators. Using this methodology combined with a more conventional technical analysis and fundamental analysis, we attempt to find the most accurate representation of AmerisourceBergen's intrinsic value. In addition to deriving basic predictive indicators for AmerisourceBergen, many experienced traders also check how macroeconomic factors affect AmerisourceBergen price patterns. Please read more on our technical analysis page or use our predictive modules below to complement your research.
Sophisticated investors, who have witnessed many market ups and downs, anticipate that the market will even out over time. This tendency of AmerisourceBergen's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as AmerisourceBergen. Your research has to be compared to or analyzed against AmerisourceBergen's peers to derive any actionable benefits. When done correctly, AmerisourceBergen's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy toward taking a position in AmerisourceBergen.

How important is AmerisourceBergen's Liquidity

AmerisourceBergen financial leverage refers to using borrowed capital as a funding source to finance AmerisourceBergen ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. AmerisourceBergen financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Financial leverage can amplify the potential profits to AmerisourceBergen's owners, but it also increases the potential losses and risk of financial distress, including bankruptcy, if the firm cannot cover its debt costs. The degree of AmerisourceBergen's financial leverage can be measured in several ways, including by ratios such as the debt-to-equity ratio (total debt / total equity), equity multiplier (total assets / total equity), or the debt ratio (total debt / total assets). Please check the breakdown between AmerisourceBergen's total debt and its cash.

Closer look at AmerisourceBergen Semi Deviation

AmerisourceBergen has current Semi Deviation of 1.46. Semi-deviation provides a good measure of downside risk for a equity or a portfolio. It is similar to standard deviation, but it only looks at periods where the returns are less than the target or average level.
Semi-deviation is the square root of semi-variance. Semi-variance is calculated by averaging the deviations of returns that have a result that is less than the mean.
Semi Deviation 
=  
SQRT(SV) 
 = 
1.46
SQRT = Square root notation
SV =   AmerisourceBergen semi variance of returns over selected period
Let's now compare AmerisourceBergen Semi Deviation to its closest peers:
ABC
CAH
MCK
FZMD
ABC1.46
CAH1.5
MCK1.4
FZMD10.72

AmerisourceBergen has 54 percent chance to slip below $103 in 30 days

The expected short fall is down to -1.58 as of today. AmerisourceBergen has relatively low volatility with skewness of 1.13 and kurtosis of 3.56. However, we advise all investors to independently investigate AmerisourceBergen to ensure all accessible information is consistent with the expectations about its upside potential and future expected returns.

Our Final Take On AmerisourceBergen

Whereas other entities in the medical distribution industry are either recovering or due for a correction, AmerisourceBergen may not be as strong as the others in terms of longer-term growth potentials. With an impartial outlook on the current market volatility, it may be better to hold off any inventment activity and neither buy nor sell any shares of AmerisourceBergen at this time. The AmerisourceBergen risk-reward trade off is not appealing enough to do any trading. Please use our equity advice module to run different scenarios to ensure your current risk level and investment horizon are fully reflective of your current investing preferences in regards to AmerisourceBergen.

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Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Ellen Johnson do not own shares of AmerisourceBergen. Please refer to our Terms of Use for any information regarding our disclosure principles.

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