Cardinal Health (CAH) Needs CVS Renewal After Walgreen Loss - Analyst
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Price: $225.38 -0.42%
Rating Summary:
18 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 19 | Down: 9 | New: 26
Rating Summary:
18 Buy, 9 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 19 | Down: 9 | New: 26
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UBS cut its price target on Cardinal Health (NYSE: CAH) from $52 to $50 after the company lost the Walgreen (NYSE: WAG) contract, but is sticking with its Buy rating.
Given the Walgreen disappointment, increased importance is now placed on CVS (NYSE: CVS), the analyst notes.
"To say that CAH mgmt is disappointed with the WAG contract outcome is quite an understatement, but one of the key takeaways from our discussions with CAH is that mgmt does have contingency plans in place to still grow EPS in FY14 once WAG rolls off," analyst Steven Valiquette said. "Now that WAG is settled, investor focus now turns to the CVS contract renewal. Our prior consultant discussions lead us to believe CVS prefers to maintain separate contracts with its distributors. However, we believe CAH now needs to retain at least its portion of CVS to avoid the perception of disaster."
The firm moved FY13 EPS estimates from $3.49 to $3.50 and cut FY14 from $3.85 to $3.55.
For an analyst ratings summary and ratings history on Cardinal Health click here. For more ratings news on Cardinal Health click here.
Shares of Cardinal Health closed at $42.35 yesterday.
Given the Walgreen disappointment, increased importance is now placed on CVS (NYSE: CVS), the analyst notes.
"To say that CAH mgmt is disappointed with the WAG contract outcome is quite an understatement, but one of the key takeaways from our discussions with CAH is that mgmt does have contingency plans in place to still grow EPS in FY14 once WAG rolls off," analyst Steven Valiquette said. "Now that WAG is settled, investor focus now turns to the CVS contract renewal. Our prior consultant discussions lead us to believe CVS prefers to maintain separate contracts with its distributors. However, we believe CAH now needs to retain at least its portion of CVS to avoid the perception of disaster."
The firm moved FY13 EPS estimates from $3.49 to $3.50 and cut FY14 from $3.85 to $3.55.
For an analyst ratings summary and ratings history on Cardinal Health click here. For more ratings news on Cardinal Health click here.
Shares of Cardinal Health closed at $42.35 yesterday.
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