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Cardinal Health (CAH) Hits 52-Week High: What's Driving It?
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Shares of Cardinal Health, Inc. (CAH - Free Report) scaled a new 52-week high of $115.38 on Mar 8, before closing the session marginally lower at $115.17.
Over the past year, this Zacks Rank #1 (Strong Buy) stock has gained 64.3% compared with 18.3% growth of the industry and a 32.9% rise of the S&P 500 composite.
Over the past five years, the company registered earnings growth of 2.1% compared with the industry’s 12.8% rise. The company’s long-term expected growth rate of 14.2% compares with the industry’s growth projection of 11.6%. Cardinal Health’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 15.6%.
Cardinal Health is witnessing an upward trend in its stock price, prompted by its diversified product portfolio. The optimism led by a solid second-quarter fiscal 2024 performance and the opening of a few distribution centers are expected to contribute further. However, stiff competition and the probability of losing a major customer persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
Diversified Product Portfolio: Investors are upbeat about Cardinal Health’s Medical and Pharmaceutical offerings, which provide the company with a competitive edge in the niche space. In November 2023, the company announced the U.S. launch of its SmartGown EDGE Breathable Surgical Gown with ASSIST Instrument Pockets to provide surgical teams with safe and convenient instrument access in the operating room.
In September 2023, CAH announced the U.S. launch of its Kangaroo OMNI Enteral Feeding Pump, designed to help provide enteral feeding patients with more options to meet their personalized needs throughout their enteral feeding journey.
Distribution Centers: Investors are optimistic about Cardinal Health’s opening of a few distribution centers in strategic areas over the past few months. At the time of its second-quarter fiscal 2024 earnings release, management announced its plans to build a new at-Home Solutions distribution center in Texas, with increased capacity, advanced automation and robotics within the facility.
In June 2023, the company announced its plans to build a new distribution center in Greenville, SC to support its at-Home Solutions business, a home healthcare medical supplies provider serving people with chronic and serious health conditions in the United States.
Strong Q2 Results: Cardinal Health’s impressive second-quarter fiscal 2024 results buoy optimism. The company’s robust top and bottom-line results and solid performance by both segments were encouraging.
Downsides
Probabilities of Loss of a Major Customer: Cardinal Health faces the risk of losing considerable business if it loses a major customer, which will severely impair its revenues in the future. In this regard, after establishing a generic sourcing joint venture with CVS Caremark in 2014, Cardinal Health largely depends on the former for more than 20% of its revenues. Collectively, five of CAH’s main customers, including CVS, accounted for as much as 40% of its revenues.
Stiff Competition: Cardinal Health operates in a highly competitive environment in the distribution of pharmaceuticals and consumer healthcare products, as well as in the manufacturing and distribution of medical devices and surgical products. The company also competes on many levels, including price and service offerings.
Other Key Picks
A few other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Zimmer Biomet Holdings, Inc. (ZBH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with an average surprise of 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 80.1% compared with the industry’s 27.1% growth in the past year.
Zimmer Biomet, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 7.2%. ZBH’s earnings surpassed estimates in three of the trailing four quarters and broke even once, with the average surprise being 4.9%.
Zimmer Biomet’s shares have gained 2% compared with the industry’s 11.3% growth in the past year.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 60.1% compared with the industry’s 7.7% growth in the past year.
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Cardinal Health (CAH) Hits 52-Week High: What's Driving It?
Shares of Cardinal Health, Inc. (CAH - Free Report) scaled a new 52-week high of $115.38 on Mar 8, before closing the session marginally lower at $115.17.
Over the past year, this Zacks Rank #1 (Strong Buy) stock has gained 64.3% compared with 18.3% growth of the industry and a 32.9% rise of the S&P 500 composite.
Over the past five years, the company registered earnings growth of 2.1% compared with the industry’s 12.8% rise. The company’s long-term expected growth rate of 14.2% compares with the industry’s growth projection of 11.6%. Cardinal Health’s earnings surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 15.6%.
Cardinal Health is witnessing an upward trend in its stock price, prompted by its diversified product portfolio. The optimism led by a solid second-quarter fiscal 2024 performance and the opening of a few distribution centers are expected to contribute further. However, stiff competition and the probability of losing a major customer persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
Diversified Product Portfolio: Investors are upbeat about Cardinal Health’s Medical and Pharmaceutical offerings, which provide the company with a competitive edge in the niche space. In November 2023, the company announced the U.S. launch of its SmartGown EDGE Breathable Surgical Gown with ASSIST Instrument Pockets to provide surgical teams with safe and convenient instrument access in the operating room.
In September 2023, CAH announced the U.S. launch of its Kangaroo OMNI Enteral Feeding Pump, designed to help provide enteral feeding patients with more options to meet their personalized needs throughout their enteral feeding journey.
Distribution Centers: Investors are optimistic about Cardinal Health’s opening of a few distribution centers in strategic areas over the past few months. At the time of its second-quarter fiscal 2024 earnings release, management announced its plans to build a new at-Home Solutions distribution center in Texas, with increased capacity, advanced automation and robotics within the facility.
In June 2023, the company announced its plans to build a new distribution center in Greenville, SC to support its at-Home Solutions business, a home healthcare medical supplies provider serving people with chronic and serious health conditions in the United States.
Strong Q2 Results: Cardinal Health’s impressive second-quarter fiscal 2024 results buoy optimism. The company’s robust top and bottom-line results and solid performance by both segments were encouraging.
Downsides
Probabilities of Loss of a Major Customer: Cardinal Health faces the risk of losing considerable business if it loses a major customer, which will severely impair its revenues in the future. In this regard, after establishing a generic sourcing joint venture with CVS Caremark in 2014, Cardinal Health largely depends on the former for more than 20% of its revenues. Collectively, five of CAH’s main customers, including CVS, accounted for as much as 40% of its revenues.
Stiff Competition: Cardinal Health operates in a highly competitive environment in the distribution of pharmaceuticals and consumer healthcare products, as well as in the manufacturing and distribution of medical devices and surgical products. The company also competes on many levels, including price and service offerings.
Other Key Picks
A few other top-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Zimmer Biomet Holdings, Inc. (ZBH - Free Report) and Cencora, Inc. (COR - Free Report) .
DaVita, sporting a Zacks Rank #1 at present, has an estimated long-term growth rate of 12.1%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with an average surprise of 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have gained 80.1% compared with the industry’s 27.1% growth in the past year.
Zimmer Biomet, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 7.2%. ZBH’s earnings surpassed estimates in three of the trailing four quarters and broke even once, with the average surprise being 4.9%.
Zimmer Biomet’s shares have gained 2% compared with the industry’s 11.3% growth in the past year.
Cencora, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 9.8%. COR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 6.7%.
Cencora’s shares have rallied 60.1% compared with the industry’s 7.7% growth in the past year.