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Cardinal Health Inc CAH

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Morningstar’s Analysis

Valuation
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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Third-Quarter Delay in Volume Recovery Is Temporary; Maintaining Cardinal Health's FVE

Karen Andersen, CFA Sector Strategist

Analyst Note

| Karen Andersen, CFA |

Narrow-moat Cardinal Health posted moderate fiscal third-quarter earnings in which a higher brand mix cushioned the impact of weak generic distribution revenue. Normalized earnings came in slightly above our expectations on both sequential and yearly bases. Compared with the fiscal second quarter, net income declined by 11%, and net margin declined by 7 basis points to 1.15%. Management expects a full recovery of branded pharmaceuticals by the end of the fiscal year based on encouraging trends in the last few months, though generics volume will remain diminished beyond this. Fiscal EPS guidance was narrowed to $5.90-$6.05 from $5.85-$6.10. We maintain our fair value estimate of $60 per share.

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Company Profile

Business Description

Cardinal Health is the third- largest global logistics provider engaged in wholesale pharmaceutical and medical products. Similar to its closest two peers, the company has evolved over time and has become entrenched in the sourcing and distribution of brand-name and generic pharmaceuticals and related services to hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories, and physician offices. Through acquisitions, Cardinal Health has the ability to manufacture commodity products and certain medical devices.

Contact
7000 Cardinal Place
Dublin, OH, 43017
T +1 614 757-5000
Sector Healthcare
Industry Medical Distribution
Most Recent Earnings Mar 31, 2021
Fiscal Year End Jun 30, 2021
Stock Type Classic Growth
Employees 48,000

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