Analyst Upgrades Cardinal Health After Spinoff

WASHINGTON (AP) — Shares of medical supplies distributor Cardinal Health ticked higher Tuesday after a Goldman Sachs analyst upgraded the stock after the company spun off a key business.

Goldman analyst Randall Stanicky upgraded Cardinal Health to "buy" from "neutral," saying volatile trading that has plagued the stock should subside following the spinoff.

Last month Cardinal's medical technology division began operating as a separate company called Carefusion, which includes nearly two dozen device businesses acquired since the mid-1990s.

"With the spin now behind us, we see appropriately reset targets against low expectations creating an attractive set-up ahead of what should be a solid fiscal 2011," Stanicky wrote in a note to investors.

He set a six-month price target of $31 on Cardinal's shares, up from $27.

The stock rose 66 cents, or 2.5 percent, to $27.29 in afternoon trading.

Stanicky said lower expectations for the slimmed-down Cardinal will position the company to exceed growth expectations in fiscal 2011.

The analyst also raised price targets on drug distributor competitors AmerisourceBergen Corp. and McKesson Corp. He raised Amerisource's price to $23 from $19, and McKesson's to $58 from $48.

AmerisourceBergen was off 24 cents at $21.50, while McKesson dipped 32 cents to $57.91.