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On Monday, Mizuho (NYSE:MFG) Securities updated their outlook on Cardinal Health (NYSE:CAH), increasing the price target to $150 from the previous $142, while reiterating an Outperform rating on the company’s shares. The healthcare giant, currently valued at $32.96 billion, has shown impressive momentum with a 24.55% return over the past six months. According to InvestingPro data, the stock is trading near its 52-week high of $137.18. The adjustment comes amid various factors that could influence the healthcare services giant’s financial performance, including the company’s exposure to tariffs, potential impacts from FDA staff reductions, and the anticipated earnings per share (EPS) boost from the pending acquisition of Advanced Diabetes Supply Group (ADSG).
Mizuho’s analyst Steven Valiquette provided insights into several areas affecting Cardinal Health’s business. Valiquette anticipates that the impact of tariffs on the company will be neutral overall, as the pharmaceutical segment might balance out the medical sector. Additionally, the analyst suggests that recent layoffs at the FDA could inadvertently benefit generic drug pricing, potentially providing a tailwind for Cardinal Health.
The firm has also revised its EPS estimates based on the expected merger and acquisition (M&A) accretion from Cardinal Health’s upcoming transaction with ADSG, a private company. The new projections see an uptick in the EPS for fiscal year 2025, climbing from $7.95 to $8.00, accounting for one quarter’s impact of the ADSG deal. Looking further ahead, Mizuho anticipates the EPS for fiscal year 2026 to increase from $8.85 to $9.05, and for fiscal year 2027, from $9.75 to $10.13.
The revised $150 price target is based on a 15 times price-to-earnings (P/E) ratio applied to the higher estimated EPS of $9.60 for the calendar year 2026, up from the prior estimate of $9.30. Valiquette’s analysis does not incorporate any model changes for the potential effects of tariffs or FDA layoffs but does factor in the additional M&A accretion from the ADSG transaction.
Cardinal Health has yet to comment on the updated price target and maintained rating. The company’s stock performance and future financial results will continue to be watched closely by investors and industry analysts alike, as the healthcare sector adapts to changing market conditions and regulatory environments. Based on InvestingPro’s comprehensive Fair Value analysis, Cardinal Health appears fairly valued at current levels. For deeper insights, investors can access the detailed Pro Research Report, available exclusively to subscribers, which provides extensive analysis of Cardinal Health’s financial health, growth prospects, and market position.
In other recent news, Cardinal Health reported its second-quarter earnings for fiscal year 2024, surpassing analyst expectations with an earnings per share (EPS) of $1.93 against the forecasted $1.77. Revenue also exceeded projections, reaching $55.3 billion compared to the expected $54.56 billion. Despite these positive results, Jefferies analyst Brian Tanquilut upgraded Cardinal Health stock from Hold to Buy, setting a new price target of $150, up from $140, based on the company’s promising future earnings and management performance.
Additionally, Cardinal Health has expanded its Board of Directors by appointing two new independent directors, Robert Musslewhite and Sudhakar Ramakrishna, to enhance its focus on advanced analytics and cybersecurity. These appointments are expected to support the company’s strategic direction in the evolving healthcare landscape. Furthermore, the healthcare sector, where Cardinal Health operates, is currently leading the S&P 500, with Cardinal Health nearing its highs following a robust uptrend, as noted by BTIG’s Technical Strategist Jonathan Krinsky.
These developments come as Cardinal Health continues to focus on customer-centric solutions and innovation. The company also raised its full-year EPS guidance to $7.85-$8.00, indicating confidence in continued growth. Strategic investments in automation and domestic manufacturing are highlighted as key areas of focus for the company moving forward.
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