Founded in 1979 and headquartered in Dublin, Ohio, Cardinal Health, Inc. (CAH) is a leading distributor of pharmaceuticals as well as a global manufacturer and distributor of medical and laboratory products. Valued at a market cap of $23.5 billion, the company also offers performance and data solutions to healthcare facilities, aiming to improve operational efficiency and patient outcomes.
Shares of this healthcare distributor have significantly underperformed the broader market over the past 52 weeks. CAH stock has surged 13.5% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 28.9%. In 2024, shares of Cardinal Health are down 4.4%, compared to the SPX's 11.2% gains on a YTD basis.
Zooming in further, CAH has outpaced the S&P Healthcare Services SPDR’s (XHS) 3.3% gains over the past 52 weeks but lags behind the exchange-traded fund’s return of about 1.7% on a YTD basis.
Cardinal Health’s relative underperformance can be traced to several significant challenges plaguing the healthcare industry, including tight financial and human resource constraints, efficient delivery of medical supplies to homebound patients needing hospital-level care, and ensuring a reliable product supply amid ever-changing demands.
On May 2, the company revealed its Q3 earnings results, which topped Street predictions on the bottom lines while falling shy of expectations on the top line. Adding to the worries, the company’s preliminary outlook for the fiscal year 2025 fell below expectations. This mixed bag prompted a nearly 4% dip in its shares during subsequent trading sessions, underscoring investor apprehension.
For the current fiscal year, ending in June, analysts expect CAH’s EPS to grow by 26.9% to $7.35. The company's earnings surprise history is promising. It holds a solid track record of consistently surpassing the consensus estimates in each of the last four quarters.
Among the 15 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on five “Strong Buy” ratings, one “Moderate Buy,” eight “Holds,” and one “Strong Sell.”
This configuration is slightly more bullish than three months before, with four analysts suggesting a "Strong Buy."
On May 3, analysts at Evercore raised the target price for Cardinal Health to $115, maintaining an “In-Line” rating on the stock. The price target suggests a 19.3% upside potential from current price levels.
The mean price target of $113 represents a premium of 17.2% to CAH’s current levels. The Street-high price target of $128, implies that the stock could rally as much as 32.8%.
On the date of publication, Anushka Mukherjee did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
