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Analyst Blog

Leading distributor of pharmaceuticals and medical supplies Cardinal Health (CAH - Analyst Report) recently announced it had been recognized as a Promising Practice by the Work Life Legacy Military Award. This award was bestowed by the Families and Work Institute (FWI) on account of the increased employment challenges as well as opportunities encountered by service personnel entering the civilian workforce.  

The FWI is a renowned, non-partisan, non-profit think tank. This research body evaluates changes in the ranks of the employed and their families. It spots nascent trends and then carries out research that yields practical results. FWI created the Work Life Legacy Award to encapsulate the experience of those who led the Work Life movement in order to motivate others.

Cardinal Health was honored for its Transition and Mentoring program which is a training program that facilitates transition from service to civilian employment. With over two million military personnel slated to enter the civilian workforce by 2016, the need to help this cohort is a major domestic issue.     

Cardinal Health is ranked among Fortune 500 companies. With over $100 billion in annual sales, Cardinal Health remains one of the largest distributors of pharmaceuticals and medical supplies in the U.S. The company’s diversified product portfolio may partly insulate it from the current economic uncertainty.

The company stands to gain from the gradual shift in mix from bulk to the higher-margin non-bulk sector of the Pharmaceutical segment. It is also riding the generic wave. Overall, Cardinal benefits from a spate of tuck-in acquisitions and capital deployment strategies.

However, the company faces tough competition across all business segments, which may continue to pressure pricing and margins. Its major competitors in the pharmaceutical supply chain segment include McKesson Corp. (MCK - Analyst Report) and AmerisourceBergen Corp. (ABC - Analyst Report).

We have a long-term Neutral recommendation on Cardinal. The stock currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.