Cencora (COR), McKesson (MCK), and Cardinal Health (CAH) performed strongly in 2025, and the drug distributors group is well-positioned to deliver sustainable earnings-per-share growth in the low to mid-teens over time, BofA Securities said in a note Monday.

The analysts said industry utilization remains strong, competitive threats are limited, and each company has a clear capital deployment strategy that aligns well with long-term industry trends.

The analysts said that despite these positive factors, they see several risks that could slow momentum over the next year. These include potential declines in wholesale acquisition cost prices for certain drugs starting in 2026, weaker-than-expected deflation in generic drug pricing, headwinds to medical services organization businesses from "most favored nation" pricing, and a possible investor rotation into other healthcare subsectors.

"While distributors will likely benefit from continued broad-based utilization, demand, and demographic trends, we believe it is prudent to expect slightly moderated but still strong growth over the next year, given healthcare policy uncertainty," the analysts said.

The analysts also said that their top pick for 2026 is Waystar (WAY). The stock has faced pressure from non-fundamental factors, including selling by private equity investors, uncertainty following its recent acquisition of Iodine, and concerns that UnitedHealth Group (UNH) could regain lost market share. They added that they expect these headwinds to fade over the next year.

BofA reduced Cencora's price target to $360 from $380 and maintained Waystar's price objective at $52.

Price: 337.67, Change: -1.20, Percent Change: -0.36