Cardinal Health, Inc. (CAH) is a healthcare services and products company with a market cap of around $27 billion. The Dublin, Ohio-based company provides a wide range of solutions, including drug distribution and medical supplies, to various healthcare providers globally.

Companies valued at $10 billion or more are generally labeled as “large-cap” stocks, and Cardinal Health fits this criterion perfectly. Cardinal Health is renowned for its extensive network of radiopharmacies and its significant role in supplying medical products to over 75% of U.S. hospitals, distinguishing it as a leader in both pharmaceutical distribution and medical supply manufacturing.

Despite its strong market position, the prescription drug distributor has experienced a decline of 4.6% from its 52-week high of $116.05, reached on Sep. 3. Shares of CAH have risen 6.4% over the past three months, outperforming the broader Nasdaq Composite's ($NASX) marginal gain over the same time frame.

However, longer term, CAH is up 9.9% on a YTD basis, lagging behind NASX's 20% gains. Moreover, shares of Cardinal Health have gained 25.5% over the past 52 weeks, compared to NASX's 31.7% return over the same time frame.

Yet, since mid-August, CAH has been trading above its 50-day and 200-day moving average, indicating a strong bullish trend.

Cardinal Health's underperformance in 2024 is specifically driven by the impending loss of its contract with OptumRx, which threatens a significant revenue source, coupled with increased competition and market volatility impacting its pharmaceutical distribution segment. However, the stock rose 3.7% on Aug. 14 following the company’s announcement of an increased profit forecast for 2025, driven by strong demand for branded and specialty medicines in its pharmaceuticals unit. Plus, the company reported better-than-expected Q4 adjusted profit of $1.84 per share and revenue of $59.9 billion.

In comparison with its rival, McKesson Corporation (MCK), has gained 17.6% over the past 52 weeks, underperforming CAH over the same time frame. Also, on a YTD basis, MCK’s shares have risen 9.8%, slightly lagging behind CAH’s return.

Despite CAH’s underperformance relative to NASX over the past year, analysts remain moderately optimistic about its prospects. Among the 15 analysts covering the stock, there is a consensus rating of “Moderate Buy,” and the mean price target of $117.57 suggests a premium of only 6.1% to current levels.

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