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McKesson Corporation

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McKesson has had an unimpressive run on the bourse in the last three months. However, solid performance at the Distribution Solutions segment is likely to drive growth. The company’s strong guidance for fiscal 2018 holds promise. The upside is expected to be driven by market growth, acquisitions and divestitures. Recently, McKesson announced that it has entered into an agreement to buy RxCrossroads from CVS Health for $735 million. The acquisition is expected to close by fourth-quarter. On the flipside, revenues from Technology Solutions are expected to be down year over year. Furthermore, stiff competition, currency headwind and reimbursement issues remain challenges. Pricing pressure in the independent retail pharmacy channel is a headwind. Particularly, McKesson’s sell-side pricing environment continues to remain competitive with less pricing variability.


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