Cardinal Health (CAH): Rethinking Valuation After a Strong Multi‑Month Share Price Rally

Cardinal Health (CAH) has quietly turned into a strong compounder, with the stock up around 69% year-to-date and roughly 34% over the past 3 months, drawing fresh attention from long term investors.

See our latest analysis for Cardinal Health.

That surge has come despite a recent pullback, with the 7 day share price return negative but the 30 day share price return still positive and the 3 year total shareholder return exceptionally strong. This signals momentum that is moderating rather than breaking.

If Cardinal Health’s run has you rethinking the healthcare space, this could be a good moment to explore other opportunities across healthcare stocks and see what else fits your strategy.

With Cardinal Health now flirting with analyst targets yet still trading at a steep implied discount to intrinsic value, investors face a pivotal question: is there still upside to capture, or is the market already pricing in its future growth?

Most Popular Narrative: 7% Undervalued

With Cardinal Health last closing at $199.71 against a narrative fair value of about $214.71, the story assumes more upside is still on the table.

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.

Read the complete narrative.

Curious how modest margin expansion, steady revenue growth, and a rich future earnings multiple combine to justify that higher value? The crucial assumptions might surprise you.

Result: Fair Value of $214.71 (UNDERVALUED)

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

However, tighter regulation on drug pricing and the potential loss of key customer contracts could quickly cap upside and challenge the current undervaluation story.

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

Another Angle on Valuation

Multiples tell a more cautious story. Cardinal Health trades on a P/E of 29.7x, richer than peers at 26.2x and above its own fair ratio of 29.3x. That premium implies less margin for error, so how much execution risk are investors really willing to pay for?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Cardinal Health Narrative

If you would rather challenge these assumptions and dig into the numbers yourself, you can build a personalized view of Cardinal Health in 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.

Ready for your next investing move?

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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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