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McKesson (MCK) Beats on Earnings in Q3, Inks Buyout Deal
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McKesson Corporation (MCK - Free Report) reported third-quarter fiscal 2017 (ended Dec 31, 2016) earnings of $3.03 per share, beating the Zacks Consensus Estimate of $2.95 but declining from the year-ago figure of $3.18.
Revenues, on the other hand, improved 5% year over year to $50.1 billion. However, the figure failed to meet the Zacks Consensus Estimate of $50.7 billion.
CoverMyMeds Acquisition Deal
McKesson announced that it has entered into an agreement to acquire privately owned company CoverMyMeds for approximately $1.1 billion. Columbus, OH, based CoverMyMeds provides electronic prior authorization solutions to pharmacies, providers, payers and pharmaceutical manufacturers. The transaction is expected to close in the first half of fiscal 2018.
Stock Performance
Over the last three months, the stock lost 12.87%, comparing unfavorably with the Zacks classified Medical/Dental Supplies sub industry’s gain of 2.78%. However, a long-term expected earnings growth rate of 8.39% instills confidence in investors.
Quarter in Detail
McKesson operates through two segments – Distribution Solutions and Technology Solutions. All growth rates given below are on a year-over-year basis.
At Distribution Solutions, revenues grew 5.0% to $49.4 billion. North America pharmaceutical distribution and services reported sales of $41.7 billion, up 5.0%, reflecting market growth and acquisitions. Revenues were, however, hit by branded to generic conversions. Revenues from International pharmaceutical distribution and services were up 3.0% to $6.2 billion driven by acquisitions and market growth. Medical-Surgical distribution and services generated sales of $1.6 billion, down 1.0%.
However, revenues from the Technology Solutions business were flat at $0.7 billion. Quarterly revenues boosted by growth in other technology businesses were offset by the decline in hospital software business.
McKesson Corporation Price, Consensus and EPS Surprise
McKesson expects earnings per share in the range of $9.80 to $10.30 for fiscal 2017. Revenues from Distribution Solutions are projected to grow in the mid single digits. Revenues from Technology Solutions are expected to be down slightly on a year-over-year basis.
Zacks Rank & Key Picks
McKesson currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the broader medical sector include Addus Glaukos Corporation (GKOS - Free Report) , ARIAD Pharmaceuticals, Inc. and Hologic, Inc. (HOLX - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock witnessed an impressive one-year return of 161.3%.
ARIAD Pharmaceuticals estimates sales growth of around 28.9% for the current year. Additionally, the company’s one-year return of almost 365.1% is quite promising.
Hologic has a long-term expected earnings growth rate of approximately 10.32%. Notably, the stock registered an impressive one-year return of 12.6%.
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McKesson (MCK) Beats on Earnings in Q3, Inks Buyout Deal
McKesson Corporation (MCK - Free Report) reported third-quarter fiscal 2017 (ended Dec 31, 2016) earnings of $3.03 per share, beating the Zacks Consensus Estimate of $2.95 but declining from the year-ago figure of $3.18.
Revenues, on the other hand, improved 5% year over year to $50.1 billion. However, the figure failed to meet the Zacks Consensus Estimate of $50.7 billion.
CoverMyMeds Acquisition Deal
McKesson announced that it has entered into an agreement to acquire privately owned company CoverMyMeds for approximately $1.1 billion. Columbus, OH, based CoverMyMeds provides electronic prior authorization solutions to pharmacies, providers, payers and pharmaceutical manufacturers. The transaction is expected to close in the first half of fiscal 2018.
Stock Performance
Over the last three months, the stock lost 12.87%, comparing unfavorably with the Zacks classified Medical/Dental Supplies sub industry’s gain of 2.78%. However, a long-term expected earnings growth rate of 8.39% instills confidence in investors.
Quarter in Detail
McKesson operates through two segments – Distribution Solutions and Technology Solutions. All growth rates given below are on a year-over-year basis.
At Distribution Solutions, revenues grew 5.0% to $49.4 billion. North America pharmaceutical distribution and services reported sales of $41.7 billion, up 5.0%, reflecting market growth and acquisitions. Revenues were, however, hit by branded to generic conversions. Revenues from International pharmaceutical distribution and services were up 3.0% to $6.2 billion driven by acquisitions and market growth. Medical-Surgical distribution and services generated sales of $1.6 billion, down 1.0%.
However, revenues from the Technology Solutions business were flat at $0.7 billion. Quarterly revenues boosted by growth in other technology businesses were offset by the decline in hospital software business.
McKesson Corporation Price, Consensus and EPS Surprise
McKesson Corporation Price, Consensus and EPS Surprise | McKesson Corporation Quote
Fiscal 2017 Outlook
McKesson expects earnings per share in the range of $9.80 to $10.30 for fiscal 2017. Revenues from Distribution Solutions are projected to grow in the mid single digits. Revenues from Technology Solutions are expected to be down slightly on a year-over-year basis.
Zacks Rank & Key Picks
McKesson currently carries a Zacks Rank #4 (Sell). Better-ranked stocks in the broader medical sector include Addus Glaukos Corporation (GKOS - Free Report) , ARIAD Pharmaceuticals, Inc. and Hologic, Inc. (HOLX - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock witnessed an impressive one-year return of 161.3%.
ARIAD Pharmaceuticals estimates sales growth of around 28.9% for the current year. Additionally, the company’s one-year return of almost 365.1% is quite promising.
Hologic has a long-term expected earnings growth rate of approximately 10.32%. Notably, the stock registered an impressive one-year return of 12.6%.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>