Can Sustained Product Demand Drive CAH Stock Before Q3 Earnings?

Core Viewpoint - Cardinal Health, Inc. is set to report its third-quarter fiscal 2025 results, with expectations of continued strong performance driven by recent acquisitions and robust pharmaceutical demand [1][10]. Group 1: Recent Acquisitions and Strategic Growth - The acquisition of Integrated Oncology Network (ION) in December 2024 is expected to enhance Cardinal Health's oncology services through integration into its Navista practice [2]. - In November, Cardinal Health announced plans to acquire a majority stake in GI Alliance and Advanced Diabetes Supply Group, with the acquisition of GI Alliance completed in January, supporting its multi-specialty growth strategy [3]. - These acquisitions are anticipated to positively impact the Pharmaceutical and Specialty Solutions segment, although the full effects may be realized by the end of the fiscal year [4]. Group 2: Financial Performance and Estimates - For the third quarter, the Zacks Consensus Estimate for revenues is $55.03 billion, reflecting a 0.2% increase year-over-year, while the EPS estimate is $2.15, indicating a 3.4% increase from the prior year [10]. - The Pharmaceutical and Specialty Solutions segment is projected to generate revenues of $49.41 billion, down 2.4% year-over-year, influenced by customer contract expirations [6][5]. Group 3: Product Launches and Innovations - The Nuclear and Precision Health Solutions business has begun weekly production of actinium-225 (Ac-225), enhancing the availability of investigational therapeutic drug products [7]. - The launch of the Kendall SCD SmartFlow Compression System is expected to boost sales in the Global Medical Products and Distribution segment [8]. Group 4: Market Performance and Valuation - Cardinal Health's shares have increased by 8.3% over the past three months, outperforming the Medical - Dental Supplies sector and other peers [13][17]. - The company's forward 12-month price-to-earnings (P/E) ratio is 15.7X, which is below the industry average of 16.7X, indicating potential for growth relative to its peers [18][19]. Group 5: Long-Term Growth Prospects - Cardinal Health is constructing a new at-Home Solutions distribution center in Fort Worth, TX, expected to be operational by summer 2025, which will enhance its distribution capabilities [20]. - The opening of a new distribution center in Boylston, MA, is anticipated to strengthen supply chain resiliency and improve service for New England customers [21].