Bank of America Securities analyst Allen Lutz has reiterated their neutral stance on CAH stock, giving a Hold rating yesterday.
Geoff Meacham has given his Hold rating due to a combination of factors that influence Cardinal Health’s current performance and future outlook. The Pharmaceutical segment is meeting expectations with gross profit margins exceeding predictions, reflecting a solid core business operation. However, the Medical segment’s earnings before interest and taxes (EBIT) are weaker than anticipated, and operating expenses have risen, partly due to strategic investments in business operations and infrastructure, such as the Navista network and new distribution facilities in Texas and South Carolina. This increased spend and the underperformance in the Medical segment’s core growth contribute to a cautious stance, despite management’s confidence in a second-half ramp-up in the Medical division.
The report also notes an increase in the price objective to $115, influenced by a revised earnings per share (EPS) estimate for fiscal years 2024 and 2025, which takes into account reduced interest expenses and share repurchases. While the drug distributors sub-sector remains attractive due to consistent competitive dynamics and utilization trends, there are execution risks that warrant a Neutral rating. Furthermore, future monitoring will focus on healthcare utilization that influences both segments, the impact of inflationary pressures, and the company’s ability to align Medical EBIT with expectations, alongside hospital utilization trends that could affect Medical EBIT.
In another report released yesterday, Evercore ISI also maintained a Hold rating on the stock with a $110.00 price target.
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Cardinal Health (CAH) Company Description:
Cardinal Health, Inc. is a healthcare services and products company, which engages in the provision of customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories and physician offices. It also provides medical products and pharmaceuticals and cost-effective solutions that enhance supply chain efficiency. The company operates through the following segments: Pharmaceutical and Medical. The Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical and over-the-counter healthcare and consumer products. The Medical segment manufactures, sources and distributes cardinal health branded medical, surgical and laboratory products. The company was founded by Robert D. Walter in 1979 and is headquartered in Dublin, OH.
Read More on CAH:
- Cardinal Health Reports Second Quarter Fiscal 2024 Results and Raises Fiscal 2024 Outlook
- Notable companies reporting before tomorrow’s open
- M & A News: Cardinal Health (NYSE:CAH) Jumps on $1.2B Acquisition of Specialty Networks
- Cardinal Health to acquire Specialty Networks for $1.2B in cash
- Cardinal Health to acquire Specialty Networks and its PPS Analytics platform, a technology enabled multi-specialty group purchasing and practice enhancement organization in urology, rheumatology and gastroenterology
