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McKesson (MCK) Hits 52-Week High: What's Aiding the Stock?
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Shares of McKesson Corporation (MCK - Free Report) scaled a new 52-week high of $284.28 on Mar 11, before closing the session marginally lower at $281.23.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 48.9% compared with 1.6% growth of the industry and 6.1% rise of the S&P 500 composite.
McKesson is witnessing an upward trend in its stock price, prompted by its robust Biologics business. A solid third-quarter fiscal 2022 performance, along with its strategic deals, is expected to contribute further. However, stiff competition and weaker generic pharmaceutical pricing trends persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
Strength in Biologics: Investors are optimistic about McKesson’s robust Biologics business. Independent specialty pharmacy, Biologics by McKesson, has been making impressive progress of late. This month, the pharmacy was selected by Agios Pharmaceuticals, Inc. as a specialty pharmacy provider for PYRUKYND (mitapivat) for the treatment of hemolytic anemia in adults with pyruvate kinase deficiency.
In December 2021, the pharmacy was selected by Calliditas Therapeutics as the exclusive specialty pharmacy provider for TARPEYO (budesonide) delayed-release capsules to reduce proteinuria in adults with primary immunoglobulin A nephropathy (IgAN) who are at risk of rapid disease progression.
Strategic Deals: McKesson has inked some strategic deals over the past few months, raising investors’ optimism on the stock. Per its third-quarter fiscal 2022 earnings release, post an agreement in November 2021 to sell the remaining share of GEHE Pharma Handel and Alliance Healthcare Deutschland joint venture to Walgreens Boots Alliance, McKesson completed the transaction on Jan 31, 2022.
The company, in December, entered into an agreement to sell its Austrian business to Quadrifolia Management GmbH. The transaction includes the sale of McKesson Austria’s Herba Chemosan Apotheker-AG, together with Sanova Pharma GesmbH. The transaction was closed on Jan 31, 2022.
Strong Q3 Results: McKesson’s robust third-quarter fiscal 2022 results buoy optimism. The company recorded strong segmental performances in the reported quarter. McKesson raising its earnings outlook for fiscal 2022 instills confidence in the stock. Double-digit adjusted operating profit growth across all segments is encouraging. The company’s crucial role in COVID-19 response efforts in the United States and abroad through the distribution of COVID-19 vaccines, ancillary supply kits and COVID-19 tests is impressive.
Downsides
Weak Trends: McKesson distributes generic pharmaceuticals, which are subject to price fluctuations. The Distribution Solutions segment continues to experience weaker generic pharmaceutical pricing trends. Continued volatility, unfavorable pricing trends, reimbursement of generic drugs and significant fluctuations in the nature, frequency and magnitude of generic pharmaceutical launches could have a material adverse impact on McKesson.
Stiff Competition: Distribution Solutions faces stiff competition both in terms of price and service from various full-line, short-line and specialty wholesalers, service merchandisers, self-warehousing chains, manufacturers engaged in direct distribution, third-party logistics companies and large-payer organizations. Moreover, the company depends on fewer suppliers for its products. As a result, it is not in a position to negotiate pricing.
Key Picks
Some better-ranked stocks in the broader medical space include Henry Schein, Inc. (HSIC - Free Report) , Allscripts Healthcare Solutions, Inc. (MDRX - Free Report) and AMN Healthcare Services, Inc. (AMN - Free Report) .
Henry Schein, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average beat being 25.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein has gained 23.4% compared with the industry’s 1.6% growth over the past year.
Allscripts has an estimated long-term growth rate of 16.3%. MDRX’s earnings surpassed estimates in the trailing four quarters, the average beat being 64.8%. It currently flaunts a Zacks Rank #1.
Allscripts has gained 33.3% against the industry’s 54.3% fall over the past year.
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average beat being 20%. It currently sports a Zacks Rank #1.
AMN Healthcare has gained 22.1% against the industry’s 61.3% fall over the past year.
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McKesson (MCK) Hits 52-Week High: What's Aiding the Stock?
Shares of McKesson Corporation (MCK - Free Report) scaled a new 52-week high of $284.28 on Mar 11, before closing the session marginally lower at $281.23.
Over the past year, this Zacks Rank #2 (Buy) stock has gained 48.9% compared with 1.6% growth of the industry and 6.1% rise of the S&P 500 composite.
McKesson is witnessing an upward trend in its stock price, prompted by its robust Biologics business. A solid third-quarter fiscal 2022 performance, along with its strategic deals, is expected to contribute further. However, stiff competition and weaker generic pharmaceutical pricing trends persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
Strength in Biologics: Investors are optimistic about McKesson’s robust Biologics business. Independent specialty pharmacy, Biologics by McKesson, has been making impressive progress of late. This month, the pharmacy was selected by Agios Pharmaceuticals, Inc. as a specialty pharmacy provider for PYRUKYND (mitapivat) for the treatment of hemolytic anemia in adults with pyruvate kinase deficiency.
In December 2021, the pharmacy was selected by Calliditas Therapeutics as the exclusive specialty pharmacy provider for TARPEYO (budesonide) delayed-release capsules to reduce proteinuria in adults with primary immunoglobulin A nephropathy (IgAN) who are at risk of rapid disease progression.
Strategic Deals: McKesson has inked some strategic deals over the past few months, raising investors’ optimism on the stock. Per its third-quarter fiscal 2022 earnings release, post an agreement in November 2021 to sell the remaining share of GEHE Pharma Handel and Alliance Healthcare Deutschland joint venture to Walgreens Boots Alliance, McKesson completed the transaction on Jan 31, 2022.
The company, in December, entered into an agreement to sell its Austrian business to Quadrifolia Management GmbH. The transaction includes the sale of McKesson Austria’s Herba Chemosan Apotheker-AG, together with Sanova Pharma GesmbH. The transaction was closed on Jan 31, 2022.
Strong Q3 Results: McKesson’s robust third-quarter fiscal 2022 results buoy optimism. The company recorded strong segmental performances in the reported quarter. McKesson raising its earnings outlook for fiscal 2022 instills confidence in the stock. Double-digit adjusted operating profit growth across all segments is encouraging. The company’s crucial role in COVID-19 response efforts in the United States and abroad through the distribution of COVID-19 vaccines, ancillary supply kits and COVID-19 tests is impressive.
Downsides
Weak Trends: McKesson distributes generic pharmaceuticals, which are subject to price fluctuations. The Distribution Solutions segment continues to experience weaker generic pharmaceutical pricing trends. Continued volatility, unfavorable pricing trends, reimbursement of generic drugs and significant fluctuations in the nature, frequency and magnitude of generic pharmaceutical launches could have a material adverse impact on McKesson.
Stiff Competition: Distribution Solutions faces stiff competition both in terms of price and service from various full-line, short-line and specialty wholesalers, service merchandisers, self-warehousing chains, manufacturers engaged in direct distribution, third-party logistics companies and large-payer organizations. Moreover, the company depends on fewer suppliers for its products. As a result, it is not in a position to negotiate pricing.
Key Picks
Some better-ranked stocks in the broader medical space include Henry Schein, Inc. (HSIC - Free Report) , Allscripts Healthcare Solutions, Inc. (MDRX - Free Report) and AMN Healthcare Services, Inc. (AMN - Free Report) .
Henry Schein, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average beat being 25.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein has gained 23.4% compared with the industry’s 1.6% growth over the past year.
Allscripts has an estimated long-term growth rate of 16.3%. MDRX’s earnings surpassed estimates in the trailing four quarters, the average beat being 64.8%. It currently flaunts a Zacks Rank #1.
Allscripts has gained 33.3% against the industry’s 54.3% fall over the past year.
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in the trailing four quarters, the average beat being 20%. It currently sports a Zacks Rank #1.
AMN Healthcare has gained 22.1% against the industry’s 61.3% fall over the past year.