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Cardinal Health Inc CAH

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Morningstar’s Analysis

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Cardinal's Second-Quarter Results Slightly Flat Relative to Pharmaceutical Distributor Peers

Soo Romanoff Equity Analyst

Analyst Note

| Soo Romanoff |

Narrow-moat Cardinal Health reported strong second-quarter normalized EPS results that included over a $0.20 benefit from a notably lower effective tax rate of 14%. The balance of the upside was associated with improved leverage of fixed distribution costs with better-than-expected top-line growth in the medical segment. Management increased its guidance range by 3% from the midpoint, likely to reflect the improved scale. The tone of the earnings discussion was neutral when compared with the upbeat conversations of the other two leading distributors, which may be a function of the transition of the company's new CFO and numerous other moving parts. We maintain our previous estimates (at the high end of previous guidance but at midpoint of new guidance) and fair value estimate of $60 per share.

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Company Profile

Business Description

Cardinal Health Inc is the third- largest global logistics provider engaged in wholesale pharmaceutical and medical products. Similar to the other 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.

7000 Cardinal Place
Dublin, OH, 43017
T +1 614 757-5000
Sector Healthcare
Industry Medical Distribution
Most Recent Earnings Dec 31, 2020
Fiscal Year End Jun 30, 2020
Stock Type High Yield
Employees 48,000