We maintain our recommendation on
) at Neutral. Earnings per share from continuing operations for the
fourth quarter of fiscal 2012 of 73 cents beat the Zacks Consensus
Estimate by a penny. Earnings per share of $3.21 for the fiscal
also surpassed the Zacks Consensus Estimate by a cent. Net income
from continuing operations (as reported) were up about 14% year
over year to $236 million (or 68 cents a share) in the reported
Revenues in the fourth quarter stood at $26.8 billion, flat on a
year-over-year basis, trailing the Zacks Consensus Estimate of
$27.1 billion. The Pharmaceutical segment, Cardinal's mainstay,
posted revenues of $24.3 billion. The 1% year over year decrease
was due to brand-to-generic conversions. Sales from the smaller
Medical segment improved 5% year over year to $2.4 billion, on the
back of higher sales of preferred offerings.
For fiscal 2013, Cardinal expects its adjusted earnings per
share from continuing operations in a band of $3.35 and $3.50.
Cardinal Health is ranked among the Fortune 500. With over $100
billion in annual sales, Cardinal Health remains one of the largest
distributors of pharmaceuticals and medical supplies in the U.S.
Its diversified product portfolio may partly insulate it from the
current economic uncertainty.
The company stands to gain from the gradual shift in mix from
bulk to the higher-margin non-bulk sector of the Pharmaceutical
segment. It is also riding the generic wave. Overall, Cardinal has
benefited from a spate of tuck-in acquisitions and capital
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
The stock currently retains a Zacks #4 Rank, which translates
into a short-term Sell recommendation.
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