What’s going on here?
Cardinal Health just raised its earnings forecast for fiscal 2025, thanks to positive trends in drug distribution, impressing Wall Street.
What does this mean?
Cardinal Health updated its earnings outlook amid strong performance in the drug distribution sector, similar to competitor McKesson. With adjusted EPS now expected between $8.15 and $8.20 for the current year—exceeding predictions—the company is set for solid growth. By fiscal 2026, it foresees EPS reaching $9.10 to $9.30, driven by pharma and specialty business expansion. Despite tariff challenges in its global medical products segment, Cardinal shares rose 0.8% on Friday following a 4.6% jump on Thursday. Morgan Stanley increased its price target to $181, maintaining an overweight rating.
Why should I care?
For markets: Riding the wave of healthcare strength.
The drug distribution sector’s favorable conditions are benefiting more than just Cardinal Health. The entire industry is seeing a boost, creating opportunities for investments in pharma and specialty areas. Companies like Cardinal are thriving, despite facing tariff challenges that affect certain revenue streams.
The bigger picture: Future growth amidst challenges.
Cardinal Health aims for a 12% to 14% compound annual growth rate in adjusted EPS from fiscal 2026 to 2028. By managing a 2% revenue dip from tariffs in its branded portfolio, the company demonstrates how strategic planning leads to sustained growth, addressing immediate hurdles while ensuring a promising future in healthcare.