- Soon after medical distributor Cardinal Health ( NYSE: CAH ) topped estimates with its Q1 FY23 financials, Bank of America upgraded the stock to Neutral from Underperform, citing the performance of the company’s pharmaceutical segment.
- During the quarter, revenue growth in Cardinal’s ( CAH ) pharma segment improved to ~15% YoY from ~13% in the prior-year period, while the medical segment contracted ~9% YoY from ~5% YoY growth in Q1 FY22.
- The analysts led by Michael Cherny expect the core pharma distribution market to benefit from multiple factors, including stable volumes and potential near-term upside from the flu season.
- That should also steady Cardinal’s ( CAH ) pharma segment growth, albeit at a slower rate than that of rivals AmerisourceBergen ( ABC ) and McKesson ( MCK ), the team added.
- Given an improving macro outlook for logistics and amid focused cost-cutting measures, CAH’s “Medical segment has a clear path for improvement,” the analysts wrote, citing share repurchases as a reason for the upgrade.
- However, the analysts remain on the sidelines given Cardinal’s ( CAH ) premium valuation compared to historical multiples and its peers.
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Cardinal Health upgraded at Bank of America on pharma performance