Cardinal Health stock is Friday's IBD Stock Of The Day, as the multinational medical and pharmaceutical distributor is close to an early buy point as medical stocks attempt to weather the current market environment.
Health care companies are often somewhat insulated from recessionary risks, given how much the government and insurers cover medical costs. Medical stocks, including Cardinal Health stock, often are defensive growth names that perform well in choppy or weak markets. And in the current market, medical companies and pharmaceutical stocks are showing some strength.
Cardinal Health, based in Dublin, Ohio, offers a wide assortment of health care services and medical supplies to hospitals, labs, pharmacies and long-term care facilities. The company reports that it serves around 90% of hospitals and 60,000 pharmacies in the U.S.
The medical and pharmaceutical distributor also has global operations, with business in more than 35 countries and more than 10,000 specialty physician offices and clinics. Cardinal Health serves in total around 27 million patients through its different business segments.
On Aug. 11, Cardinal Health missed fiscal fourth-quarter earnings views but topped revenue predictions. EPS grew 36% to $1.05 per share, ending a five-quarter string of year-over-year declines. Revenue grew 11% to $47.1 billion. Management also affirmed its fiscal 2023 EPS guidance of $5.05-$5.40 per share. CAH shares jumped more than 5% on Aug. 11.
Analysts forecast just 3% earnings growth in fiscal 2023 to $5.23 per share. However, Wall Street expects more robust earnings growth of 18%, to $6.18 per share, in 2024.
Cardinal Health will report Q1 2023 earnings on Nov. 4. Analysts forecast earnings falling 26% to 96 cents per share. Sales are expected to increase 10% to $48.3 billion, according to FactSet.
Cardinal Health Stock
CAH shares fell 1.15% to 68.08 during market trading Friday. Cardinal Health is working on a flat base, part of a base-on-base formation. The official buy point is 72.38, according to MarketSmith analysis. Aggressive investors could use the high of 71.12 on Oct. 11 as an early entry point. However, with the market in correction investors should exercise caution.
CAH shares have been finding support at its rising 50-day moving average, closing just above that key level Friday. The stock's relative strength line has also been trending up for months. Cardinal Health hit relative strength highs on Oct. 11.
In August, Cardinal Health stock cleared a cup base with a 64.63 buy point. Between Aug. 11 and Aug. 15, CAH shares jump 8% before hitting its recent high of 72.28 on Sept. 2 as it worked on its new flat base.
Cardinal Health stock ranks second in the Medical-Wholesale Drug/Supplies industry group, trailing only McKesson. MCK stock also is trading around its 50-day line in a flat base with a rising RS line. McKesson fell 0.5% Friday.
CAH stock has a 93 Composite Rating out of 99. It has a 96 Relative Strength Rating, an exclusive IBD Stock Checkup gauge for share-price movement that tops at 99. The rating shows how a stock's performance over the last 52 weeks holds up against all the other stocks in IBD's database. The stock's EPS rating is 73.
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