Tuesday, Baird analyst Eric Coldwell raised the price target on Cardinal Health (NYSE:CAH) shares to $130 from $129, while maintaining an Outperform rating on the stock. Coldwell's adjustment reflects a positive stance on the company's future after a period of significant changes and announcements.
Cardinal Health has recently completed a segment reclassification and has made the decision regarding the OptumRx contracts public. Additionally, the company raised its fiscal year 2024 guidance and set preliminary expectations for fiscal year 2025.
These developments contribute to the analyst's view that the upcoming distributor quarter will be more stable compared to the heightened activity experienced year-to-date.
The analyst emphasized the expectation that Cardinal Health's communication will remain consistent and on target. Despite the loss of the OptumRx contract, Coldwell believes that Cardinal Health shares are currently undervalued. He acknowledges, however, that investors may remain cautious as the company approaches fiscal year 2025.
Cardinal Health's recent moves, including the raised guidance and clear future expectations, are seen as steps to reassure investors and stabilize the company's outlook. The slight increase in the price target suggests confidence in the company's ability to navigate the upcoming fiscal challenges and opportunities.
In other recent news, Cardinal Health has been making significant headlines with a series of noteworthy developments. The company's recent earnings call revealed an increase in its non-GAAP EPS guidance for FY '24 to $7.30-$7.40, indicating a 27% growth midpoint above FY '23. With a strategic focus on core operations and growth, Cardinal Health is expected to see continued profitability and expansion.
In addition, the company announced an increase in its quarterly dividend to $0.50 per share, demonstrating its financial health and commitment to returning capital to its investors. This revised dividend is scheduled to be paid out in July 2024.
Analysts from Baird and Argus have also updated their outlooks on Cardinal Health. While Baird raised its price target to $129 from $128 and reaffirmed an Outperform rating, Argus reduced its target to $115 from $120, maintaining a Buy rating. These revisions reflect the company's valuation and strategic moves amidst contract pressures and the ongoing opioid litigation.
Speaking of the opioid litigation, Cardinal Health is among the implicated parties in the recent settlements exceeding $46 billion, resulting from lawsuits tied to the opioid crisis. The company, along with others, was accused of contributing to the opioid addiction epidemic. The total financial impact of these settlements now surpasses $50 billion.
These developments highlight the dynamic and evolving landscape for Cardinal Health, as it navigates through its strategic plans, financial commitments, and legal implications.
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