J.P. Morgan Takes A Deep Look At Yong Yu For Cardinal Health

In a report published by J.P. Morgan, Cardinal Health (NYSE: CAH) is taking a deeper look at Yong Yu.

J.P. Morgan said that this morning, it is launching a series of reports as part of Cardinal Week, which will run through Thursday, with today's focus on Cardinal Health's recent acquisition of Yong Yu, the Chinese pharmaceutical distributor acquired by Cardinal in November 2010. We will host a conference call on Wednesday with George Barrett, Chairman and CEO of Cardinal Health to discuss the company's strategy. “Cardinal expects the transaction to be slightly accretive to non-GAAP earnings in FY11 and more meaningfully accretive in FY12 and beyond, primarily driven by organic growth. We expect the transaction to add $0.02 to FY11E and $0.06 to FY12E, including amortization. IMS Health projects the Chinese market to grow at a 20% CAGR between now and 2014; CAH expects to grow above the market as they gain market share. Margin expansion and cost synergies are not included in guidance thus providing upside opportunity.”

Cardinal Health closed yesterday at $40.45.