CAH - Embedded Expectations Analysis - 2021 07 12
Cardinal Health, Inc. (CAH:USA) currently trades near historical lows relative to UAFRS-based (Uniform) earnings, with a 14.6x Uniform P/E. At these levels, the market is pricing in expectations for profitability to remain weak, and management may have concerns about strategy execution, acute script recovery, and the sustainability of COVID-19 testing tailwinds.Valens' qualitative analysis of the firm's Q3 2021 earnings call highlights that management may lack confidence in their ability to meet their revised EPS guidance, execute their strategic priorities, and use stockpile-as-a-service to meet customer inventory needs. In addition, they may have concerns about the pace of recovery of acute script levels and elective procedure volumes. Furthermore, management may lack confidence in their ability to improve their self-manufacturing capabilities and expand their patient network. Moreover, they may be concerned about the sustainability of COVID-19 testing product demand, the business impact of a light flu season, and their Cordis sale.
Cardinal Health is a healthcare services and products company providing customized solutions for hospitals, healthcare systems, pharmacies, ambulatory surgery centers, clinical laboratories and physician offices. The company's segments include: Pharmaceutical and Medical. The company's Pharmaceutical segment distributes branded and generic pharmaceutical, specialty pharmaceutical and over-the-counter healthcare and consumer products in the United States. The company's Medical segment manufactures, sources and distributes Cardinal Health branded medical, surgical and laboratory products, which are sold in the United States, Canada, Europe, Asia and other markets.
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