Key Takeaways:
- MWI Divestiture: Cencora agreed on February 18, 2026, to merge MWI Animal Health with Covetrus in a deal valuing MWI at $3.5 billion, with Cencora receiving $1.25 billion cash plus $2.25 billion in combined equity while retaining a 34.3% non-controlling stake, sharpening focus on core drug distribution.
- Q1 Earnings and Guidance Raise: Cencora delivered Q1 adjusted EPS of $4.08 on February 4, 2026, beating estimates by $0.04, and raised full year consolidated operating income growth guidance to 11.5%–13.5% from 8%–10%, driven by OneOncology’s contribution and U.S. Healthcare Solutions’ 21% operating income growth.
- Price Target: Based on 7% revenue growth, 1% operating margins, and a 18x exit multiple, Cencora stock could reach $407 by September 2028 from $360 today.
- Return Profile: Cencora implies 13% total upside from $360 to $407 over 2.6 years, equating to a 5% annualized return supported by a 9% dividend growth rate and full year adjusted free cash flow guidance of approximately $3 billion.
Breaking Down the Case for Cencora, Inc.
Just last week, Cencora (COR) agreed to merge MWI Animal Health with privately held Covetrus in a transaction valuing MWI at $3.5 billion, with Cencora receiving $1.25 billion in cash and $2.25 billion in combined preferred and common equity while retaining a 34.3% non-controlling stake in the combined animal health platform.
Last February 4, Q1 adjusted EPS of $4.08 beat estimates by $0.04 as consolidated revenue of $85.9 billion grew 5.5%, driven by U.S. GLP-1 sales rising $1 billion or 11% and U.S. Healthcare Solutions operating income expanding 21% to $831 million.
Fiscal 2025 revenue of $321.3 billion grew 9.3% on gross profit of $11.2 billion at 3.5% margins, yet operating income of $3.7 billion held at 1.2% margins as $6.5 billion in SG&A consumed the majority of gross profit across the enterprise.
CFO Jim Cleary stated on the February’s earnings call that “if you back out RCA and OneOncology, our performance in the U.S. was still towards the higher end of our long-term guidance range,” which confirms the core drug distribution business sustains 7%–10% operating income growth independent of acquisition contributions.
Share repurchases are paused as Cencora finances the OneOncology acquisition through a $3 billion senior notes offering closed February 13, 2026, pushing full year interest expense guidance to $480–$500 million from the prior $315–$335 million range.
The investment tension centers on whether Cencora sustains U.S. Healthcare Solutions operating income growth of 14%–16% through OneOncology’s ramp while absorbing $480–$500 million in annual interest expense, against a backdrop of $360 current stock price, 17.5x exit multiple, and a 5% annualized return through September 2028 that demands 7% revenue growth without the MWI divestiture creating near-term earnings dilution.
What the Model Says for COR Stock
The MWI divestiture at $3.5 billion on February 18, 2026, removes a non-core segment generating $91 million in quarterly operating income, while the $480–$500 million interest expense burden from OneOncology financing directly pressures the earnings base the model requires to sustain margin expansion.
The model’s assumption sets 7% revenue growth, 1.4% operating margins, and a 17.5x exit multiple, producing a $407 target price by September 2028, with the margin assumption in line with the fiscal 2026 EBIT margin estimate of 1.4% and representing modest expansion from the 1.2% fiscal 2025 level.
The market assumption for the forward P/E as of February 17, 2026, stands at 20x, expanded from 15x at December 2024, as OneOncology’s acquisition and GLP-1 utilization trends expanded investor willingness to pay above 18x, and the model’s 17.5x exit sits below the current market assumption.
The Street mean target of $403 as of February 17, 2026, sits just below the current $360 price at a 112% target-to-price ratio, with 11 of 18 analysts at Buy or Outperform, yet the model delivers only 13% total upside and a 4.8% annualized return from $360, sitting materially below the 10% equity hurdle rate.
The model signals a Sell, as a 4.8% annualized return sits well below the 10% equity hurdle rate, and the $407 target by September 2028 does not compensate investors for $480–$500 million in annual interest expense and MWI divestiture earnings dilution at the current $360 share price.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for Cencora stock:
1. Revenue Growth: 7.2%
Cencora stock delivered 9.3% revenue growth in fiscal 2025 to $321.3 billion as GLP-1 utilization surged $1 billion in a single quarter and specialty sales to health systems accelerated, yet the MWI divestiture removes the animal health revenue base from the consolidated growth trajectory.
The fiscal 2026 revenue estimate of $346.4 billion reflects 7.8% growth, slightly above the model’s assumption, as OneOncology’s MSO revenue consolidation and continued GLP-1 volume expansion support the trajectory, yet paused share repurchases redirect capital toward debt service rather than earnings-per-share accretion.
The 7.2% model’s assumption through September 2028 rests on U.S. Healthcare Solutions sustaining specialty volume growth within the 7%–10% long-term guidance range, OneOncology’s revenue ramp continuing organically and inorganically, and the lost oncology customer headwind fully cycling out after Q3 fiscal 2026.
Any slowdown in GLP-1 utilization growth, combined with the grocery customer off-boarding and the oncology customer loss persisting through Q3, compounds revenue shortfalls faster than the specialty distribution model can absorb, as each 100 basis point revenue miss on $346 billion represents $3.5 billion in lost top-line scale.
This sits below the 1-year revenue growth of 9.3%, as the MWI divestiture removes an asset generating 6% annual revenue growth and OneOncology’s low-revenue MSO model limits top-line contribution despite its strong operating income accretion.
2. Operating Margins: 1.4%
Cencora stock reported 1.2% operating margins in fiscal 2025 on $3.7 billion in operating income, consistent across every measured period, as gross profit of $11.2 billion at 3.5% margins funded $6.5 billion in SG&A, leaving less than 2 cents of every revenue dollar as operating income.
The 1.4% model’s assumption sits above the 1.3% LTM EBIT margin level, consistent with the fiscal 2026 EBIT margin estimate of 1.4%, as RCA’s higher-margin clinical research model and OneOncology’s MSO operating income contribution structurally lift the blended margin above the legacy distribution baseline.
Reaching 1.4% by September 2028 requires OneOncology’s operating income ramp to exceed its first-year EPS neutrality threshold, interest expense of $480–$500 million to stabilize as debt is paid down, and U.S. Hub Consulting’s full asset impairment to eliminate future depreciation drag without additional charges.
The market assumption for the forward P/E as of February 17, 2026, stands at 20x, expanded from 15x at December 2024, as the OneOncology acquisition and GLP-1 volume growth expanded investor willingness to pay above 18x, creating a sentiment premium the model’s 1.4% margin assumption must validate through MSO execution.
Any failure in OneOncology’s operating income ramp, combined with $480–$500 million in annual interest expense and MWI divestiture earnings dilution, collapses margins back toward 1.2% faster than specialty volume growth can recover, as each 10 basis point margin shortfall on $346 billion represents $346 million in missed operating income.
This sits above the 1-year operating margin of 1.2% from fiscal 2025, as the model embeds the full-year OneOncology consolidation and RCA’s outperformance versus initial expectations, and reaching 1.4% requires interest expense to stabilize while MSO contribution scales without integration cost overruns.
3. Exit P/E Multiple: 17.5x
The 17.5x exit multiple capitalizes Cencora stock’s normalized net income at September 2028 under conditions of 7.2% revenue growth and 1.4% operating margins, treating the multiple as a terminal earnings anchor for a pharmaceutical distributor with structurally thin margins and durable specialty volume growth.
The model already embeds 1.4% operating margin expansion and 7.2% revenue growth through fiscal 2028, meaning the 17.5x exit multiple does not require additional credit for MSO platform scaling or GLP-1 volume acceleration, as both are already absorbed in the earnings trajectory.
The market assumption for the forward P/E as of February 17, 2026, stands at 20x, expanded from 15x at December 2024, as OneOncology’s acquisition and specialty utilization trends expanded investor willingness to pay above 18x, and the model’s 17.5x exit sits below the current market assumption, anchoring on normalization from today’s elevated level.
If OneOncology’s operating income ramp disappoints or the $480–$500 million interest burden persists longer than modeled, earnings compression below the 1.4% margin assumption pushes the sustainable multiple toward the 15x to 16x range observed across the 3-year and 5-year historical averages, and the $407 target collapses toward the Street’s low target of $340.
This sits below the 1-year historical P/E of 18.3x, as the model anchors on multiple normalization away from the OneOncology acquisition premium, and sustaining 17.5x through September 2028 requires debt paydown to reduce interest expense while MSO margins scale above the distribution baseline without integration disruption.
What Happens If Things Go Better or Worse?
Cencora stock’s trajectory through September 2030 turns on whether OneOncology’s MSO platform delivers the operating income ramp management committed to, how quickly the $480–$500 million interest burden unwinds through debt paydown, and whether GLP-1 utilization sustains its current momentum across health systems and physician practices.
- Low Case: If OneOncology integration stalls and GLP-1 volume growth moderates while interest expense stays elevated, revenue grows around 6.2% and net income margins stay near 1% → 0% annualized return.
- Mid Case: With OneOncology ramping as guided, specialty utilization steady, and debt paydown reducing interest drag, revenue growth near 6.8% and margins improving toward 1% → 4.5% annualized return.
- High Case: If OneOncology exceeds its first-year neutrality threshold, RCA’s clinical trial platform scales across the MSO, and GLP-1 volumes accelerate further, revenue reaches about 7.5% and margins approach 1.1% → 8.6% annualized return.
How Much Upside Does Cencora Stock Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
