Earnings Preview: Cardinal Health

Aug. 1.12 | About: Cardinal Health (CAH)

Cardinal Health (NYSE:CAH) is expected to report Q4 earnings before the market open on Thursday, August 2 with a conference call scheduled for 8:00 am ET.

Guidance

Analysts are looking for EPS of 72c on revenue of $27.27B. The consensus range is 70c-76c for EPS, and $26.78B-$27.92B for revenue, according to First Call. After reporting better-than-expected EPS and revenue in Q3, the company had lowered its lower end of FY12 EPS guidance to $3.15-$3.20 and expects the FY12 revenue growth rate to be similar to FY11. The company had also reported Q3 Pharmaceutical revenue was up 3% and its Q3 Medical revenue was up 8%, and investors will look for similar positive results from those two units. Cardinal Health said it expects the medical business to return to bottom line growth in Q4, and commodity prices are beginning to moderate. In a regulatory filing on July 31, Express Scripts had informed Cardinal Health that it will not renew its pharmaceutical distribution agreement that has provided Cardinal with approximately $9B of annual revenue to the company.

Analyst Views

Despite the news, William Blair maintains that the company should be bought on weakness. The firm said the loss of the Express Scripts contract should have a material bottom-line impact to the company, and only lowered the FY13 EPS by 3c to reflect the loss.