Updated Aug 19 at 6:03am ET.
Follow Cardinal Health to never miss an important update.
Barclays nudged its price target up from $258 to $275 while keeping a positive rating on the stock. This follows a strong quarterly report where the company issued a profit outlook for next year that was higher than what most analysts expected. While the target change is a vote of confidence in the company's momentum, it is a routine adjustment that doesn't change the overall investment case.
Source: Barclays
The company reported quarterly earnings of $2.91 per share, well ahead of the $2.42 analysts expected. While revenue of about $63.7 billion was slightly lower than predicted, the business is earning more profit on each sale by focusing on specialty medications, which are complex drugs that require more careful handling than standard pills.
Management now expects earnings to grow between 13 and 15 percent next year, reaching as much as $12.60 per share. This is a strong signal that the shift toward higher-margin health solutions is working. The board also authorized another $5 billion for share buybacks, a move that uses spare cash to reduce the number of shares and make each remaining one more valuable.
See the full quarter, and how our tracked metrics did
Source: 8-K filing
On August 7, the company signed a new unsecured credit agreement that gives it access to $4 billion in revolving credit for the next five years. This new facility replaces three older, smaller borrowing setups, including a $2 billion credit line and a $1 billion short-term facility.
This is a routine financial housecleaning that simplifies the company's debt structure and ensures it has plenty of cash available for general business needs. To keep this access, the company must follow certain rules, such as keeping its total debt at a reasonable level compared to its earnings.
Source: 8-K filing
The board of directors approved a quarterly dividend of $0.5158 per share. This payment will be made on October 15 to anyone who owns the stock as of October 1. This is a routine continuation of the company's plan to return cash to its owners and matches the previous payout level.
Source: PRNewsWire
On August 4, the company appointed Anita Zielinski as its new Chief Accounting Officer, effective November 5. She will take over for Mary Scherer, who has held the role and will stay on through the transition. Zielinski comes with deep experience in the industry, having recently served as the interim finance chief at Baxter International and previously holding a senior role at Sysco.
While this is a senior leadership change, it appears to be an orderly transition. The company is bringing in an outsider with specific experience in large-scale distribution and healthcare, which should help maintain stability in its financial reporting as the business grows.
Source: 8-K filing
Analysts raised their price targets for Cardinal Health following strong quarterly earnings results. Most analysts, 18 of 33, rate the stock a buy, and the average target of $273 suggests about 16% room for growth.
Management has a perfect record of beating expectations over the last two years. They consistently set a bar they can clear, which makes their recent raise in guidance feel more credible.
| Expectation | |
|---|---|
| EPS | $2.91 |
| Revenue | $66.67B |
Seeking Alpha · Opinion · Aug 13
Seeking Alpha · Opinion · Aug 11
Reuters · Aug 11
Barrons · Aug 11
WSJ · Aug 11
PRNewsWire · Press release · Aug 11
Follow Cardinal Health to get the latest and most important updates.
Follow CAH