William Blair Maintains Outperform On Cardinal Health Following Fiscal Fourth Quarter Results

In a research note published yesterday, William Blair analyst John Kreger maintained an Outperform rating on Cardinal Health (CAH) following the company’s release of its fiscal fourth quarter 2014 results that were slightly better than Kreger’s model and consensus. Earnings per share of $0.83 on a non-GAAP basis (up 4% from a year ago) were a penny above his target. No price target was assigned.

Kreger wrote, “Management introduced fiscal 2015 EPS guidance of $4.10 to $4.30 (up 7% to 12%) compared with our estimate of $4.32 (up 12.5%) and the consensus of $4.25 (10.7%). We note that management has a history of guiding conservatively. Given what appears to be solid underlying fundamentals and positive industry commentary about generic inflation, we suspect that the lower guidance relative to our expectations is a result of more conservative expectations for the CVS joint venture contribution than the 7 cents we had modeled. As a result, we expect to reduce our $4.32 EPS target following this morning’s call. We maintain our Outperform rating on Cardinal given solid fundamentals, the likely accretion of the CVS/Caremark (CVS $76.49; Outperform) sourcing opportunity, and the stock’s reasonable valuation”.

The analyst concluded, “Given that consensus expectations were somewhat more muted than ours, we expect the stock to be relatively flat today and suspect that any performance deviation from that will likely be driven by commentary about the generics-related venture with CVS/Caremark on the call. We maintain our Outperform rating on Cardinal given solid fundamentals and what appears to be a sustainable double-digit bottom-line growth outlook for the next several years”.

According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst John Kreger has an 11.2% average return and a 75.0% success rate. Kreger is ranked #1249 out of 3203 analysts.

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