On Friday, Argus made a bullish move on Cardinal Health (NYSE:), upgrading the stock’s rating to Buy from Hold. The firm recognized Cardinal Health as one of the United States’ leading distributors of pharmaceuticals, as well as a global manufacturer and distributor of medical and laboratory products.
The upgrade comes after Cardinal Health’s Pharmaceutical segment, which accounts for 93% of its revenue, has shown recovery from the impacts of the pandemic. However, the Medical segment, known for its higher margins, has been under pressure due to the long-term nature of its distribution contracts that have restrained the company from transferring increased costs to its customers.
Cardinal Health has also been in the headlines for its financial commitments related to the national opioid settlement, agreeing to pay up to $6B over the next 18 years. This settlement is a significant financial undertaking for the company and reflects its efforts to address the opioid crisis.
In addition to these developments, the company has attracted the attention of Elliot Management, an activist investment firm that has recently taken a sizable position in Cardinal Health. This investment move by Elliot Management is notable, as activist investors are often involved in pushing for changes that can unlock shareholder value.
The analyst’s comments highlight the key factors that influenced the upgrade decision, pointing to the company’s recovery and the recent involvement of Elliot Management. Cardinal Health’s stock rating adjustment is a reflection of its current business dynamics and the potential for future growth as seen by Argus.
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