11:56 AM EDT, 09/18/2024 (MT Newswires) -- Cencora ( COR ) faces new and evolving challenges post-COVID-19, with analysts at BofA Securities concluding in new research on Wednesday that the drug distribution company may struggle to reach the top end of its goal of 8% to 12% yearly growth in per-share earnings.

Cencora's ( COR ) relationship with Walgreens (WBA) and Cigna (CI) will likely change as new contracts are negotiated, the analysts said. They expect the companies to reach new deals, but on terms more favorable to Cencora's ( COR ) two largest customers and eventually eroding the pace of its EPS growth.

Federal legislation allowing the government to negotiate the price of selected drugs also could create a "modest" headwind for Cencora ( COR ), according to the BoA analysts, who estimated the measure possibly may trim its distributor gross profit by 20 basis points this year. The headwind could grow as large as 1% per year as another 50 to 80 drugs become subject to negotiation beginning in 2027, they said.

BoA analysts lowered their stock rating for Cencora ( COR ) to neutral from buy, with the downgrade reflecting expectations of normalizing growth amid its contract churn and other increasing risks. They also cut their price target for Cencora ( COR ) shares to $245 from $275, reducing their multiple to around 16.5 times projected 2025 earnings from 18 times previously.

Cencora ( COR ) shares were down 2.3%in recent trading.

Price: 229.35, Change: -5.18, Percent Change: -2.21