Cardinal Health Reports Mixed Fiscal 3Q Results; Raising Our FVE to $52

While we continue to be pleased with the solid performance of Cardinal Health's core pharmaceutical distribution business (comprising around 90% of total company revenue, or 85% of operating profit), inflationary pressures appear poised to continue to pressure margin in the company's underperforming medical products business. Nonetheless, we remain reassured by the company's recent revamp of its IT infrastructure in its pharm distribution operations, and by management's expectations for the company to recognize the benefits from this conversion in fiscal 2023 and see low- to mid-single-digit operating profit growth. Accordingly, we are raising our fair value estimate to $52 per share, from $50.