Cardinal Health: Strong Outlook and Growing Priorities on Specialty Headline Solid Investor Day

Narrow-moat Cardinal Health discussed base business stability, growing importance of specialty assets, and favorable long-term targets during its 2025 investor day. Key notable business highlights included the launch of Specialty Alliance, a multispecialty managed services organization that combines recently acquired MSO assets and new investments behind at-home solutions and nuclear and precision health solutions to drive Cardinal’s small but higher-margin business units. This all wrapped up to some nice numbers for the rest of fiscal 2025 as well as a stronger-than-expected long-term outlook. After inching up our 2026 revenue and EPS assumptions as well as lifting our stage II growth rates by 50 basis points to reflect a stronger distribution market, driven by strong momentum in GLP-1s (diabetes and weight-loss) and specialty uptake, we raise our fair value estimate to $145 per share from $125.