Leerink Partners Cuts Price Target on Cardinal Health (CAH) Following 1Q
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Leerink Partners maintained an Outperform rating on Cardinal Health (NYSE: CAH), and cut the price target to $80.00 (from $95.00), following the company's 1Q earnings report. Leerink cut EPS estimates for 2017 and 2018 by ~$0.15 and ~$0.20, respectively, due to the headwinds in the Pharmaceutical Division. On the call management stated that in 2Q the Pharma operating profit would likely decline by an amount similar to the amount seen in the 1Q, which was ~(19% y/y).
Analyst David Larsen commented, "Following the earnings call with CAH management, we are incrementally more cautious on the stock. Management indicated that in F2Q:17 earnings in the Pharmaceutical Division would face a y/y decline similar to F1Q:17, and the ability to meet the F2017 guided EPS range of $5.40-$5.60 depends on management's ability to reduce costs in the "Corporate" Division. While we are more cautious on the shares, CAH has beaten consensus EPS in 20 of the past 20 quarters, and we think it is unlikely that further reductions in guidance will be necessary. We reduce our PT to $80 on a slightly lower PE due to market conditions, lower earnings visibility, and our expectation of ongoing pressures in the Pharma Division."
Shares of Cardinal Health closed at $68.69 yesterday.
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