Cardinal Health's (CAH) vertical integration of "higher-growth and higher-margin services" will compound benefits over time, generating value in its central pharmaceutical distribution business, RBC Capital Markets said in a Wednesday note.

RBC analysts forecast revenue and operating income higher than consensus estimates for the company's Other segment as they are positive on growth and margin accretion from nuclear medicine. Cardinal combines broad network reach, exclusive Actinium-225 supply agreements with TerraPower, and Contract Development and Manufacturing Organization capabilities, according to the note.

Specialty drugs will sustain momentum in pharma distribution growth, reaching more than 55% of total spending by 2028, despite headwinds from the Inflation Reduction Act, the analysts said. They added that biosimilars are expected to boost operating income by roughly $150 million by 2028.

The analysts also project that Sonexus will be a high-margin growth driver, delivering $60 million to $110 million in incremental operating income by 2028 through doubling its drug count to about 285.

RBC initiated coverage of the company's stock at outperform with a price target of $276.

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