CAH: Future EPS Momentum And Policy Risks Will Shape Medium-Term Outlook

Analysts have nudged their blended price target on Cardinal Health slightly higher, with fair value rising about $2 to roughly $217, citing stronger than expected EPS momentum, resilient core Pharma performance, and increased confidence in the company achieving its 12% to 14% long term EPS growth algorithm.

Analyst Commentary

Street commentary on Cardinal Health remains broadly constructive, with several bullish analysts lifting price targets into the low $200s and emphasizing both near term earnings momentum and the durability of the company growth algorithm.

Recent estimate revisions have also trended higher, with forward EPS expectations for FY26 and FY27 moving up as analysts incorporate stronger than anticipated Q1 performance and incremental contribution from the Solaris acquisition.

Bullish Takeaways

Bullish analysts highlight robust execution in the Pharma segment, noting that strong core volumes and favorable utilization trends are supporting higher confidence in double digit EPS growth.
Several models now assume increased EPS trajectories through FY27, with higher price targets reflecting perceived upside to management long term 12 to 14 percent adjusted EPS growth framework.
Commentary points to a clean start to FY26, including solid segment level performance and recovering margins in medical distribution, which supports a higher valuation multiple on improved earnings quality.
Guidance is viewed by some as conservative relative to recent upside delivery, suggesting potential for continued positive revisions and further re rating if execution remains consistent.

Bearish Takeaways

More cautious analysts flag that much of the near term optimism is now reflected in elevated price targets, leaving less room for multiple expansion if earnings outperformance moderates.
There is some concern that ongoing reliance on Pharma outperformance raises sensitivity to any slowdown in volume growth or pricing pressure, which could challenge the upper end of the EPS growth algorithm.
Integration and synergy realization from recent deals, including Solaris, are seen as execution swing factors, with any delays or cost overruns potentially constraining margin upside.
Peers benefiting from the same favorable demand backdrop may limit relative multiple expansion, as investors compare the Cardinal Health growth profile and risk factors against other large distributors.

What's in the News

Mizuho raised its Cardinal Health price target to $210 from $170, citing stronger post Q1 momentum and higher FY26 and FY27 EPS estimates of $9.80 and $11.20, respectively (Mizuho, Periodical).
Cardinal Health is scheduled to report earnings, with a Street consensus EPS estimate of $2.17. This places it among notable companies watched ahead of tomorrow's market open (Periodical).
The Trump administration is preparing a new probe into global drug pricing that could affect large distributors, including Cardinal Health, as well as major drugmakers and managed care companies (Financial Times, Periodical).
From July 1 to September 30, 2025, Cardinal Health repurchased about 2.0 million shares for $300 million, completing a 3.5 percent, $1.06 billion buyback program initiated in 2023 (Company filing, Key Development).
Cardinal Health continues to expand and modernize its distribution network with new high-automation pharmaceutical and consumer health facilities in Indianapolis, Indiana, and Groveport, Ohio, adding more than 250 jobs and enhancing national logistics capacity (Company press releases, Key Developments).

Valuation Changes

Fair Value has risen slightly, increasing from about $214.71 to $216.60 per share, reflecting modestly higher long term earnings expectations.
Discount Rate is effectively unchanged, remaining at 6.956 percent, indicating a stable risk assessment.
Revenue Growth assumptions are essentially flat at about 9.53 percent, implying no material change in the top line outlook.
Net Profit Margin is unchanged at roughly 0.7170 percent, signaling stable expected profitability.
Future P/E has risen modestly, increasing from about 26.90x to 27.13x, suggesting a slightly higher valuation multiple on forward earnings.

Growth in pharmaceuticals and specialty distribution is driven by demographic trends, with diversification into specialty and home healthcare strengthening future earnings potential.
Efficiency gains from automation and portfolio optimization are expected to improve margins, cash flow, and profit resilience amid ongoing healthcare industry changes.
Increasing regulatory pressures, competitive threats, customer dependence, and evolving reimbursement risks could compress margins and constrain Cardinal Health's long-term growth prospects.

Catalysts

About Cardinal Health

Operates as a healthcare services and products company in the United States, Canada, Europe, Asia, and internationally.What are the underlying business or industry changes driving this perspective?

Cardinal Health is well-positioned to benefit from increasing global demand for pharmaceuticals and medical supplies driven by an aging population and the rising prevalence of chronic diseases, which is leading to robust pharmaceutical volumes and consistent revenue growth in core and specialty distribution-positively impacting future top-line revenue.
The company's investments in automation, advanced supply chain technology, and new distribution centers are expected to deliver long-term operational efficiencies and cost savings, supporting improved net margins and free cash flow as healthcare shifts to value-based and outpatient models.
Strategic expansion into higher-margin specialty businesses, including acquisitions in multi-specialty MSO platforms (e.g., Solaris Health), specialty pharma, and biopharma solutions, should accelerate long-term profit growth, diversify revenue streams, and enhance overall earnings resilience.
The strong performance and continued investment in Other growth businesses such as at-Home Solutions, Nuclear and Precision Health, and OptiFreight Logistics aligns with the growing trend of outpatient and home healthcare-underpinning diversified revenue growth and supporting margin expansion.
Ongoing efforts to optimize the generic drug portfolio and scale Cardinal Health-branded medical products are yielding higher profitability versus branded counterparts and are expected to further enhance gross profit and operating margins, reinforcing long-term earnings growth.

Cardinal Health Earnings and Revenue Growth

Cardinal Health Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Cardinal Health's revenue will grow by 9.0% annually over the next 3 years.
Analysts assume that profit margins will increase from 0.7% today to 0.8% in 3 years time.
Analysts expect earnings to reach $2.2 billion (and earnings per share of $10.04) by about September 2028, up from $1.6 billion today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 22.5x on those 2028 earnings, down from 23.1x today. This future PE is greater than the current PE for the US Healthcare industry at 21.0x.
Analysts expect the number of shares outstanding to decline by 1.33% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 6.78%, as per the Simply Wall St company report.

Cardinal Health Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Increasing government regulation and pricing scrutiny, as referenced by the company managing through "regulatory uncertainty" and "the implementation of tariffs," could compress distribution margins and impact net margins and earnings over the long term.
Heightened competition from peers and potential loss or expiration of major customer contracts, as seen in the "previously announced customer contract expiration," could limit future revenue growth and pressure operating earnings.
Ongoing tariff headwinds and global supply chain risks remain substantial, with GMPD segment guidance assuming a "$50 million to $75 million headwind to our results in fiscal '26 from tariffs," while further volatility could drive increased costs and impact consolidated margins and net income.
Increasing consolidation and vertical integration among healthcare providers, payers, and retailers-combined with Cardinal's dependence on major customer relationships highlighted by the impact of contract expirations-may compress revenue streams and erode gross profit over time.
Potential reimbursement changes and government bidding programs, such as referenced "potential changes in the reimbursement environment" and "competitive bidding coming back," specifically in the at-Home Solutions segment, could reduce top-line growth and profitability within key business lines.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $180.462 for Cardinal Health based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $203.0, and the most bearish reporting a price target of just $150.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $288.0 billion, earnings will come to $2.2 billion, and it would be trading on a PE ratio of 22.5x, assuming you use a discount rate of 6.8%.
Given the current share price of $150.94, the analyst price target of $180.46 is 16.4% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

CAH: Core Pharmaceutical Trends And Automation Will Shape Upcoming Earnings Performance