Key Takeaways:
- Specialty Expansion: Cardinal Health raised its 2026 profit outlook to at least $10 per share as specialty revenue targets exceed $50 billion, reflecting mix improvement.
- Earnings Momentum: Cardinal Health stock gained about 74% in 2025 as adjusted profit expectations rose above the $9 consensus.
- Price Target: Cardinal Health stock could reach $250 by mid 2028 as steady revenue growth and stable margins support valuation normalization.
- Upside Math: Cardinal Health stock implies 19% total upside from the current $210 price, translating into roughly 7% annualized returns.
Cardinal Health (CAH) distributes pharmaceuticals and medical products across the United States, competing at scale with peers through logistics reach and purchasing power, generating $210 billion revenue.
Recent news shows Cardinal Health raised its 2026 profit forecast to $10 per share, strengthening confidence in specialty drug distribution growth.
Cardinal Health produced about $210 billion revenue and roughly $2 billion profit, highlighting scale advantages despite thin operating margins near 1%.
With a market value near $50 billion, Cardinal Health relies on specialty medicines exceeding $50 billion revenue to support profitability.
Despite earnings progress, Cardinal Health trades near $210, creating tension between improving fundamentals and a restrained valuation worth examining further.
What the Model Says for CAH Stock
We analyzed Cardinal Health using operating scale, specialty positioning, and capital stability reflected in consistent cash generation and shareholder returns.
Using 10.6% revenue growth, 1.3% operating margins, and an 18.2x exit multiple, the model projects Cardinal Health reaching $250.60.
That implies 19.1% total upside and a 7.5% annual return from the current price through mid 2028.
Our Valuation Assumptions
TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.
Here’s what we used for CAH stock:
1. Revenue Growth: 10.6%
Cardinal Health stock’s revenue rebounded after a -2% year, supported by specialty medicines exceeding $50 billion in sales.
Current execution reflects stable pharmaceutical distribution demand and biopharma services expansion offsetting pricing pressure in generics.
CAH stock’s risks include reimbursement changes and volume sensitivity, while scale and contract breadth support sustained topline momentum.
According to consensus analyst estimates, a 10.6% revenue growth assumption reflects recovery from normalization without assuming category acceleration beyond recent trends.
2. Operating Margins: 1.3%
CAH operating margins historically ranged near 1% to 2%, reflecting low-margin distribution economics and high volume throughput.
Recent profitability near $1 billion net income shows cost control and specialty mix improvement despite thin structural margins.
Also, margin risks include pricing compression and labor costs, while automation and sourcing discipline provide incremental support.
According to consensus market estimates, a normalized 1.3% operating margin balances structural limits with steady execution across pharmaceutical and medical segments.
3. Exit P/E Multiple: 18.2x
Cardinal Health historically traded between roughly 13x and 18x earnings during stable demand and predictable cash generation periods.
The current investor caution reflects healthcare policy risk despite earnings guidance rising toward $10 per share.
Meanwhile, valuation support depends on steady specialty growth and capital returns, without requiring sentiment re-rating.
According to consensus analyst estimates, an 18.2x exit multiple aligns with durable cash flows, supporting a $250.60 target and 7.5% annual return.
What Happens If Things Go Better or Worse?
Cardinal Health’s outcomes depend on specialty drug demand, reimbursement discipline, and execution consistency, setting up a range of possible paths through 2030.
- Low Case: If reimbursement pressure persists and volumes soften, revenue grows around 8.4% and margins stay near 0.9% → 0.0% annualized return.
- Mid Case: With specialty distribution scaling steadily, revenue growth near 9.4% and margins holding around 1.0% → 5.2% annualized return.
- High Case: If specialty mix strengthens and cost control improves, revenue reaches about 10.3% and margins approach 1.0% → 9.9% annualized return.
How Much Upside Does It Have From Here?
With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.
All it takes is three simple inputs:
- Revenue Growth
- Operating Margins
- Exit P/E multiple
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
