Cardinal Health (CAH): Exploring Valuation Following a 30% Share Price Surge

Cardinal Health (CAH) shares have steadily advanced over the past month, gaining 30%. Investors are taking a closer look at how the company's fundamentals might be driving this momentum and what it could signal in the future.

See our latest analysis for Cardinal Health.

After a remarkable 30.5% share price return this past month, Cardinal Health’s momentum is tough to ignore. The latest move builds on a robust run, with the stock delivering a 5-year total shareholder return of 339%. Investor confidence in its growth prospects also appears to be accelerating.

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With shares riding high after such substantial gains, investors are weighing whether Cardinal Health remains undervalued or if recent price moves have already accounted for its future growth potential. Is there still a buying opportunity here?

Most Popular Narrative: 60% Undervalued

The most widely followed narrative points to a sizeable gap between Cardinal Health’s current share price and its estimated fair value. With shares recently closing at $211.20 and analysts setting fair value above $212, this backdrop fuels debate on whether the market is giving full credit to future growth.

Efficiency gains from automation and portfolio optimization are expected to improve margins, cash flow, and profit resilience amid ongoing healthcare industry changes. 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.

Read the complete narrative.

Behind this eye-catching valuation is a narrative powered by ambitious forecasts. The story hints at bold margin improvements, strategic moves into new healthcare verticals, and projections for stronger earnings. Intrigued by how much optimism is built into this price target? See the underlying assumptions that may surprise even seasoned investors.

Result: Fair Value of $212.43 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, ongoing government pricing scrutiny and the potential loss of major customer contracts could quickly shift the outlook and challenge further upside for Cardinal Health.

Find out about the key risks to this Cardinal Health narrative.

Another View: What Does SWS DCF Say?

While the market sees Cardinal Health as expensive based on earnings multiples, our DCF model gives a much more bullish result. The SWS DCF model values the shares at $461.80, which is over twice the current price and points to a sizable undervaluation if the model's forward assumptions hold up.

Look into how the SWS DCF model arrives at its fair value.

Build Your Own Cardinal Health Narrative

If you have a different perspective or want to dig into the numbers yourself, you can shape your own conclusions in just a few minutes. Do it your way

A great starting point for your Cardinal Health research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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