Cardinal Health, Inc. (NYSE:CAH) Ups Its 4Q Earnings Forecast


Dallas, Texas 11/05/2013 (Financialstrend) – The S&P 500 index tracked drug wholesaler Cardinal Health, Inc. (NYSE:CAH) has a market cap of $21 billion. It reported its first quarter 2014 operations results on October 31 before markets opened. Post the announcement, the stocks took off to post an 11.25% increase in their market value during trading last week. The big spurt was triggered by a surge in its first quarter net income went up by a huge 36%. This earnings was offset by a slight 5% dip in sales during the same period. The significant revenue shortfall was recorded in the pharmaceutical sector which recorded a 7% dip in revenue in comparison to 3QFY results. The dip was attributed to the expiry of its contract with Walgreen and Express Scripts. This was offset by a 135 increase in sales and a corresponding 43% increase in net profits from the Medical segment. The jump in medical segment sales and revenue is also linked to the drug wholesaler completing the acquisition of AssuraMed.

The firm has given out equally robust outlook for FY14. Their estimated earnings per share is expected to come in the range of $3.62 to $3.72 from operations between October to December 2013. This was a substantial increase in forecast previously for the same period. In order to further increase the share holder value the board has given its go ahead to spend an additional $1 billion over the next three years to buy back shares. Readers should note that as part of previous buyback plan the company has more than $350 million left in its kitty to buy back shares from the market.

Post the results announcements, Mizuho and FBR Capital have both reiterated the stock rating at Buy and Outperform respectively and increase the price target for the stock to $65 and $66 respectively.

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