Cardinal Health stock is up about 1% after a mixed earnings report.
The stock is trying to find support after falling nearly 7% on news that its contract for OptumRx will expire in June.
Analysts will be weighing if the company’s growth expectations are enough to lift a stock that’s already up about 26% in the last 12 months.
5 stocks we like better than Cardinal Health
Investors are familiar with the phrase "buy the rumor, sell the news." However, Cardinal Health Inc. NYSE: CAHproved that investors can buy and sell the news. CAH stock is up slightly over 1% after posting mixed earnings on May 2, 2024. Cardinal Health missed somewhat on the top line but beat earnings estimates by 6%. Both revenue and earnings were higher on a year-over-year (YOY) basis by 8% and 19%, respectively.
Cardinal Health is one of the premium medical stocks and one of the largest distributors of healthcare products and services. The company also manufactures medical products and some pharmaceuticals. It's not uncommon for a conglomerate like Cardinal to show strength in one category and weakness in others. However, when you dig into the report's details, you can see that the company is showing growth in all its business units.
Will the earnings report be enough to put a floor on CAH stock, which is down more than 7% in the last month? Almost all of that loss has come in the last two weeks after the company announced its contract with UnitedHealth Group Inc. NYSE: UNH for OptumRx would expire in June.
Investors are concerned that OptumRx, the company's pharmacy benefits provider, accounted for approximately 16% of its 2023 revenue. The company believes it can cover that significant gap.
The company is maintaining its full-year and 2025 guidance based on expected high demand for its high-margin specialty drugs. Specifically, it expects a 4% to 6% compound annual growth rate (CAGR) for the segment. Cardinal also plans to lessen the impact of the Optum loss through new customer wins and "other actions."
For the full year, Cardinal Health forecasts earnings per share in the range of $7.30 and $7.40. That's up from prior guidance of $7.20 to $7.35. The company is forecasting 26% YOY earnings growth at the low end.
Cardinal Health is a dividend aristocrat that has increased its dividend for 27 consecutive years. The company didn't provide any dividend information. However, investors will likely receive an announcement of a dividend increase in the next week or so.
Analyst Sentiment Will Dictate the Short-Term Trend
The increase in CAH stock after the earnings report provides support at the level hit after the Optum news. Now, investors will have to see if analysts believe that Cardinal Health will deliver on its optimistic forecasts.
Heading into earnings, CAH stock was up about 26% in the last 12 months and was fairly priced based on the consensus price target. However, the company's forward price-to-earnings (P/E) ratio of 14.2x and PEG ratio of 1.2 would support the idea that Cardinal Health is undervalued compared to those growth expectations.
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Analysts were relatively quiet about the OptumRx news. The Cardinal Health analyst ratings on MarketBeat showed that reiterated its Underweight rating on CAH stock and lowered its price target to $94 from $96.
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For the full year, Cardinal Health forecasts earnings per share in the range of $7.30 and $7.40. That's up from prior guidance of $7.20 to $7.35. The company is forecasting 26% YOY earnings growth at the low end. Cardinal Health is a dividend aristocrat that has increased its dividend for 27 consecutive years.
may be undervalued. Its Value Score of A indicates it would be a good pick for value investors. The financial health and growth prospects of CAH, demonstrate its potential to outperform the market. It currently has a Growth Score of A.
At Cardinal Health, our mission is this: For those tasked with navigating the complexities of healthcare, Cardinal Health brings scaled solutions that help our customers thrive in a changing world. What we value: Integrity: We hold ourselves to the highest ethical standards.
The biggest competitive advantage for Cardinal Health is its distribution capability, which makes it very difficult for competitors to successfully enter the market. Cardinal Health distributes its products to roughly 90% of U.S. hospitals.
Based on 12 Wall Street analysts offering 12 month price targets for Cardinal Health in the last 3 months. The average price target is $114.42 with a high forecast of $128.00 and a low forecast of $94.00. The average price target represents a 15.68% change from the last price of $98.91.
Cardinal Health (NYSE:CAH) Third Quarter 2024 Results
Revenue: US$54.9b (up 8.8% from 3Q 2023). Net income: US$258.0m (down 25% from 3Q 2023). Profit margin: 0.5% (down from 0.7% in 3Q 2023). EPS: US$1.06 (down from US$1.35 in 3Q 2023).
The lawsuit arose from Cardinal Health's 2015 acquisition and integration of Cordis Corporation from Johnson & Johnson. During the class period, defendants allegedly failed to disclose that Cordis faced inventory and supply chain issues that were negatively impacting Cordis's financial performance.
Cardinal Health's CEO is Jason Hollar, appointed in Sep 2022, has a tenure of 1.67 years. total yearly compensation is $18.78M, comprised of 6.6% salary and 93.4% bonuses, including company stock and options. directly owns 0.018% of the company's shares, worth $4.48M.
The new company will be named CareFusion®, reflecting a diverse blend of medical technologies the company will offer to improve the safety and quality of care.
Cardinal Health is a global healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, physician offices and patients in the home.
The main competitors of Cardinal Health include Cencora (COR), McKesson (MCK), ICON Public (ICLR), Zimmer Biomet (ZBH), Align Technology (ALGN), ResMed (RMD), argenx (ARGX), Biogen (BIIB), West Pharmaceutical Services (WST), and Molina Healthcare (MOH). These companies are all part of the "medical" sector.
Outcomes unified ecosystem manages everything from dispensing to medication therapy management to patient engagement. Our solutions connect payer and pharma programs through the pharmacy to optimize efficiency and drive better patient outcomes.
We serve nearly 90% of U.S. hospitals, more than 60,000 U.S. pharmacies, and more than 10,000 specialty physician offices and clinics. We provide more than 3.4 million patients with more than 46,000 home healthcare products.
A company's earnings performance is important for value investors as well. For fiscal 2024, seven analysts revised their earnings estimate higher in the last 60 days for CAH, while the Zacks Consensus Estimate has increased $0.39 to $7.29 per share. CAH also holds an average earnings surprise of 15.6%.
The stock slid late last month after the company said its drug distribution contracts with UnitedHealth Group Inc.'s (UNH) OptumRx, a major pharmacy-benefit manager, would not be renewed.
Introduction: My name is Kerri Lueilwitz, I am a courageous, gentle, quaint, thankful, outstanding, brave, vast person who loves writing and wants to share my knowledge and understanding with you.
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