Moody's Investors Service on Monday raised its outlook on Cardinal Health Inc. to 'Positive,' saying the health care products distributor should report improved profit margins.
Moody's has an investment-grade rating of 'Baa3' on Cardinal Health's credit. That rating is one notch above "junk" status, and the positive outlook means an upgrade is possible. The firm said Cardinal Health typically has thin profit margins, but it should become more profitable as generic versions of top-selling drugs like Plavix and Lipitor reach the market. Generic drugs are less expensive than brand-name versions, but they are more profitable for distributors and drugstores.
"Cardinal continues to improve its business profile, highlighted by better positioning with independent pharmacies and stronger margins," said analyst Diana Lee
Shares of the Dublin, Ohio, company fell 77 cents during Monday trading and closed at $41.32.