Cardinal Health and Wayfair are attracting renewed Wall Street optimism after two major banks raised their price targets on the S&P 500 members, sending both stocks higher in early Thursday trading.
At a Glance
- BofA lifted Cardinal Health target to $240 from $230
- Morgan Stanley raised Wayfair target to $95 from $85
- Both stocks moved higher as the S&P 500 opened firmly higher
- Why it matters: Price-target hikes often precede institutional buying and can shorten the time a stock spends in buy-range
The upgrades arrived as the broad market attempted to snap a two-day slide, giving traders a fresh catalyst to bid up shares of the medical distributor and online furniture marketplace.
BofA Sees More Upside for Cardinal Health
Bank of America analysts reiterated their buy rating on Cardinal Health (CAH) and bumped their 12-month price objective to $240, up from the prior $230 target.
The stock responded with a modest gain, edging higher in the opening minutes of trade. Cardinal has been consolidating near technical buy levels, and the revised target implies roughly 8% additional upside from Wednesday’s close.
CAH has now drawn multiple target increases this quarter as investors wager that cost-cutting programs and a steady pharmaceutical distribution business will keep margins expanding through fiscal 2025.
Morgan Stanley Boosts Wayfair Outlook
Morgan Stanley analysts lifted their price target on Wayfair (W) to $95 from $85 while maintaining their overweight rating, citing improving repeat-order trends and early signs of market-share stabilization in North America.
Wayfair shares jumped more than 3% at the opening bell, making it one of the top percentage gainers inside the S&P 500. The stock has been forming a cup-with-handle base with a buy point just above $90, according to technical analysis screens tracked by News Of Los Angeles.
The e-commerce retailer has endured three straight quarters of declining revenue, but management guidance hinted that year-over-year comparisons could flatten by the holiday season.
Market Context: S&P 500 Rebounds After Two-Day Drop
Thursday’s target hikes landed as the S&P 500 opened firmly higher, attempting to reclaim its 50-day moving average after back-to-back distribution days. Tech and consumer discretionary sectors led the early advance, while healthcare names like Cardinal Health provided a defensive tailwind.
Volume on the New York Stock Exchange was tracking 12% above the same time Wednesday, suggesting institutions were actively positioning around the fresh research notes.
What the Upgrades Signal
Price-target increases serve as a short-term sentiment gauge. When multiple brokers lift targets within weeks, it often indicates:
- Earnings revision momentum is building
- Management guidance is deemed conservative
- Valuation discounts to peers are narrowing
For Cardinal Health, the $240 target represents roughly 18x next-year EPS estimates, still below the 20x multiple commanded by rival McKesson. Wayfair’s new $95 target equates to 1.4x forward sales, a premium to online peers but justified by the company’s 40% gross margin profile, Morgan Stanley wrote.
Technical Levels to Watch
Cardinal Health
- Buy point: $225.09 cup-with-handle entry
- Support: 50-day line near $215
- Resistance: July high of $227.42
Wayfair
- Buy point: $90.18 handle entry
- Support: 200-day line near $75
- Resistance: February gap at $98
Both stocks closed Wednesday inside the 5% buy zone that runs from the technical trigger up to 5% above it, according to News Of Los Angeles screens.
Institutional Flows Pick Up
Trading desks reported above-average call-option activity in both names shortly after the research notes hit. Cardinal Health’s August $230 calls changed hands at 3x the typical pace, while Wayfair’s weekly $90 calls saw 2.4x normal volume.
Large blocks of Cardinal Health printed at $222.50 and $223, suggesting institutions were lifting offers rather than hitting bids. Wayfair prints clustered around $82.50, just above the prior session’s high.
Key Takeaways
- BofA and Morgan Stanley delivered the latest in a string of target increases for CAH and W
- Both stocks are within striking distance of technical buy points
- The S&P 500’s early strength provided a favorable backdrop for breakouts
- Option flow indicates short-term momentum traders are positioning for continued upside
