Cardinal Health Earnings: Strong Sales Thanks to GLP-1s and COVID-19 Vaccines; Guidance Raised

Narrow-moat Cardinal Health reported fiscal 2024 first-quarter results that were slightly ahead of our expectations. Total sales were up 10.4% year over year thanks to strong performance from the distribution business, with slight offsets from the medical segment. Prescription utilization remains strong, and growth in specialty drugs and GLP-1 medications (diabetes and obesity drugs) continues to buoy demand. Against the backdrop of an improved outlook for the pharmaceutical segment, coupled with higher-than-expected contributions from COVID-19 products, the firm raised its full-year guidance for adjusted diluted EPS to $6.75-$7.00 from $6.50-$6.75. After updating our model and accounting for the time value of money, we are raising our fair value estimate to $90 per share from $85.