Wall Street Bulls Look Optimistic About Cardinal (CAH): Should You Buy?

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on Cardinal Health (CAH), and emphasizes the importance of using these recommendations in conjunction with other analytical tools like the Zacks Rank for making informed investment decisions [1][5][10]. Group 1: Brokerage Recommendations - Cardinal Health has an average brokerage recommendation (ABR) of 1.43, indicating a consensus between Strong Buy and Buy, based on recommendations from 14 brokerage firms [2]. - Out of the 14 recommendations, 11 are classified as Strong Buy, accounting for 78.6% of all recommendations [2]. - Despite the positive ABR, reliance solely on brokerage recommendations may not be prudent, as studies indicate limited success in guiding investors towards stocks with the highest price increase potential [5][10]. Group 2: Zacks Rank vs. ABR - The Zacks Rank is a proprietary stock rating tool that classifies stocks into five groups based on earnings estimate revisions, providing a more reliable indicator of near-term price performance compared to ABR [8][11]. - The Zacks Rank is updated more frequently and reflects changes in earnings estimates, making it a timely tool for predicting future price movements [12]. - Cardinal Health's Zacks Consensus Estimate for the current year has increased by 0.9% to $8.16, indicating growing optimism among analysts regarding the company's earnings prospects [13]. Group 3: Investment Implications - The recent change in the consensus estimate, along with other factors, has resulted in a Zacks Rank 2 (Buy) for Cardinal Health, suggesting a favorable outlook for the stock [14]. - The Buy-equivalent ABR for Cardinal may serve as a useful guide for investors when combined with the Zacks Rank [14].