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CareFusion Corporation Message Board

  • analyst112 analyst112 Sep 21, 2010 1:47 PM Flag

    Fundamentals are poor

    CFN is dead in the water. It is a no growth commodity company that Cardinal spunoff. They see that the CCT segment will decrease due to lower sales volume of capital equipment. Hospitals will continue to lean on suppliers for discounts --thus margins will continue under pressure. Alaris infusion has some new ventilator equipment products but they are pretty ho hum. MT&S segment revenue would have been down except for the $170 million rev acquisition. The only thing they have going for them is firing people--this is not a growth strategy.

    The estimates are silly. They are earning at a $.77 rate for the trailing 12 months. The stock is selling at 32 times earnings. Sure firing people will help earnings and they may even get up to $1.40 but that is on a 29% tax rate. Estimates will come down next quarter as margins get squeezed again. They are nuts making these unrealistic projections. The hospitals with whom I have checked are not increasing spending. Utilization rates are lower than last year and they will get no bump up until 2013 and that assumes the health care bill stays alive.

    Cardinal loaded them up with $3 billion of goodwill in order to get BV up. Hard book is $8/shr. Too bad.

    The stock will trade down to $17 which is 12 times earnings.

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CFN
46.75+0.03(+0.06%)Sep 19 4:01 PMEDT

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