Cardinal Health (NYSE:CAH - News) is slated to report second-quarter fiscal 2012 results on Thursday, February 2. The current Zacks Consensus Estimate for the second quarter is 76 cents, representing an estimated 9.94% year-over-year hike.
First Quarter Recap
Cardinal posted first quarter adjusted earnings per share from continuing operations of 73 cents, beating the Zacks Consensus Estimate by a penny and exceeding the year-ago earnings of 66 cents per share. Total revenues were $26.8 billion in the quarter, beating the Zacks Consensus Estimate of $26.3 billion.
The Pharmaceutical segment reported revenues of $24.4 billion, up approximately 10% year over year, including contribution from prior acquisitions as well as organic growth.
Revenues from the Medical segment were $2.4 billion in the first quarter, up 10%, partly due to higher sales to pre-existing clients.
Estimate Revision Trend
Agreement
Estimates for the second quarter have been largely stagnant. Out of a total of 14 analysts covering the stock, there were no revisions in the prior week while there was only one revision in the past month, in the upward direction.
With regard to estimates for fiscal 2012, no analyst (out of 15) raised or lowered his/her estimate over the past week. There were two revisions in the past month, one in the upward direction and one in the downward side. The current Zacks Consensus Estimate for fiscal 2012 is $3.19, representing an estimated 19.33% year-over-year increase.
Magnitude
The magnitude of estimate revision for the second quarter has been static over the prior week as well as the past month. The magnitude of estimate revision for the current fiscal year reached a plateau over the past week and was up by only a penny over the last month.
Cardinal has generated positive surprises in each of the previous four quarters and we believe the same trend may continue. The company produced an average positive earnings surprise of 6.23% over the four preceding quarters, meaning that it beat the Zacks Consensus Estimate by that measure.
Our Take
Cardinal Health is ranked on the Fortune 500. With over $100 billion in annual sales, the company remains one of the largest distributors of pharmaceuticals and medical supplies in the U.S., with a diversified product portfolio, which may partly insulate it from the current economic uncertainty. The company stands to gain from the gradual shift in mix from the bulk to the higher-margin non-bulk sector of the Pharmaceutical segment. It is also riding the generic wave. Overall, Cardinal is benefiting from a spate of tuck-in acquisitions and capital deployment strategies.
However, the company faces tough competition across all its business segments, which may continue to pressure pricing and margins. Its major competitors in the pharmaceutical supply chain segment include McKesson Corp. (NYSE:MCK - News) and AmerisourceBergen Corp. (NYSE:ABC - News). We currently have a long-term Outperform rating on Cardinal. The stock currently retains a Zacks #3 Rank, which translates into a short-term “Hold” recommendation.
More From Zacks.com
There are no comments yet