Earnings Preview: Cardinal Health

Cardinal Health (CAH) is expected to report Q1 earnings Thursday, November 5 before market open, with a conference call scheduled for 8:30 am ET.

Guidance

Analysts are looking for EPS of 43c on revenue of $24.04B. The consensus range is 39c-50c for EPS and $23.2B-$25.06B for revenue, according to First Call. On August 18, Cardinal Health said it expects low single-digit revenue growth for FY10. The CEO, George Barrett said, "The progress we made in fiscal 2009 reinforces our belief that the company's core businesses are strong and the investments we are making in fiscal 2010 will create a more positive and sustainable longer-term growth trajectory." Positive factors effecting this quarter's results could come from the CareFusion spin-off. Other positive drivers for this quarter include branded drug price inflation and better prescription trends. Negative drivers for the quarter might include a larger percentage of generic drugs in the pricing mix and an increasingly competitive drug distribution market.

Analyst Views

On September 24, Deutsche Bank downgraded Cardinal Health to Hold from Buy on valuation, following a rally in shares. Despite the downgrade, Deutsche Bank raised its price target to $30 from $28.50. On September 15, Goldman upgraded Cardinal Health to Buy from Neutral. The firm cites relative valuation for the upgrade.The firm raised its target on the stock to $31 from $27.