Cardinal Health gains, AmerisourceBergen falls on rating changes at Morgan Stanley
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Cardinal Health (NYSE:CAH), one of the leading drug distributors in the U.S., is trading higher in the morning hours on Tuesday after Morgan Stanley upgraded its shares to Overweight from Equal Weight.
In the same note, the analyst Ricky R Goldwasser downgraded the rival drug distributor, AmerisourceBergen (NYSE:ABC), to Equal Weight from Overweight.
Seeing that its shares trade at a three to four times discount to peers, Goldwasser argues that Cardinal Health (CAH) offers the best risk-reward skew, Bloomberg reported. Noting that company shares offer a compelling reversion trade, the analyst raised the price target to $74 from $54 per share to imply a premium of ~21% to the last close.
In her downgrade of AmerisourceBergen (ABC), Goldwasser notes that the companyâs growing presence in Europe after the 2021 acquisition of Alliance âadds complexity to the storyâ and predicts Wallgreens (WBA) cutting its stake in the company. However, the price target was raised to $178 from $142 per share to imply a premium of ~9% to Monday's close.
Last year, AmerisourceBergen (ABC) acquired a majority stake of U.K.-based drug distributor, Alliance Healthcare from Wallgreens (WBA) for $6.5 billion.
See how the shares of the three leading U.S. drug distributors performed over the past 12 months.