UPDATE: Goldman Sachs Lowers PT on Cardinal Health Following ABC/WAG Deal
In a report published Wednesday, Goldman Sachs analyst Robert P. Jones reiterated a Neutral rating on Cardinal Health (NYSE: CAH), but lowered the price target from $50.00 to $48.00.
In the report, Jones noted, “On our new estimates, ABC now trades at a 2x P/E multiple premium to MCK and CAH. While some may argue that ABC's valuation is justifiable given growth and support to numbers from the announced WAG deal, we find it difficult to overcome at current levels and maintain our Neutral rating. We still see the greatest risk/reward in MCK trading essentially at parity with CAH on our CY14, given (1) a more attractive growth profile through CY2014 after CAH's loss of WAG, (2) pending CVS contract renewals, which pose a risk for both, but greater for CAH at 31% of sales, versus MCK at 16%, and (3) a more attractive Specialty footprint - a differentiator in outer years.”
Cardinal Health closed on Tuesday at $42.35.
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