We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Here's Why You Should Hold McKesson (MCK) in Your Portfolio
Read MoreHide Full Article
McKessonCorporation (MCK - Free Report) is well-poised for growth, backed by strategic collaborations and strength in the Distribution Solutions segment. However, the company’s opioid-related litigation expenses are a potential threat.
Shares of this currently Zacks Rank #3 (Hold) company have risen 15.4% so far this year compared with the industry’s 6% growth. The S&P 500 Index has jumped 9.6% in the same time frame.
McKesson is a healthcare services and information technology company with a market capitalization of $69.74 billion. Its earnings are anticipated to improve 11.9% over the next five years.
The company’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 9.11%.
Image Source: Zacks Investment Research
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 lately. In December 2023, Novartis selected it as a specialty pharmacy provider for FABHALTA (iptacopan).
The same month, the pharmacy was selected by SpringWorks Therapeutics as a limited distribution specialty pharmacy for OGSIVEO (nirogacestat).
Strategic Deals: McKesson continues to actively pursue deals, divestitures and acquisitions to drive growth, raising our optimism. In August 2023, the company extended its relationship with Genpact. The extension was aimed at bringing continued efficiency and automation capabilities to McKesson’s finance operations, utilizing automation and AI solutions.
Strong Q3 Results: McKesson’s robust third-quarter fiscal 2024 results buoy optimism. The company recorded a robust uptick in its overall top line. The rise was primarily driven by growth in the U.S. Pharmaceutical segment, resulting from increased prescription volumes, including higher volumes from specialty products, retail national account customers and GLP-1 medications.
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 adversely impact 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.
Estimates Trend
The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $310.28 billion, indicating a 12.1% increase from the previous year’s level. The consensus mark for adjusted earnings per share is pinned at $27.62, implying a 6.5% year-over-year improvement.
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora (COR - Free Report) .
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 32% year to date compared with the industry’s 6.3% growth.
Cardinal Health, carrying a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 12% year to date compared with the industry’s 4.8% growth.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 18% year to date compared with the industry’s 5.8% growth.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Here's Why You Should Hold McKesson (MCK) in Your Portfolio
McKessonCorporation (MCK - Free Report) is well-poised for growth, backed by strategic collaborations and strength in the Distribution Solutions segment. However, the company’s opioid-related litigation expenses are a potential threat.
Shares of this currently Zacks Rank #3 (Hold) company have risen 15.4% so far this year compared with the industry’s 6% growth. The S&P 500 Index has jumped 9.6% in the same time frame.
McKesson is a healthcare services and information technology company with a market capitalization of $69.74 billion. Its earnings are anticipated to improve 11.9% over the next five years.
The company’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 9.11%.
Image Source: Zacks Investment Research
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 lately. In December 2023, Novartis selected it as a specialty pharmacy provider for FABHALTA (iptacopan).
The same month, the pharmacy was selected by SpringWorks Therapeutics as a limited distribution specialty pharmacy for OGSIVEO (nirogacestat).
Strategic Deals: McKesson continues to actively pursue deals, divestitures and acquisitions to drive growth, raising our optimism. In August 2023, the company extended its relationship with Genpact. The extension was aimed at bringing continued efficiency and automation capabilities to McKesson’s finance operations, utilizing automation and AI solutions.
Strong Q3 Results: McKesson’s robust third-quarter fiscal 2024 results buoy optimism. The company recorded a robust uptick in its overall top line. The rise was primarily driven by growth in the U.S. Pharmaceutical segment, resulting from increased prescription volumes, including higher volumes from specialty products, retail national account customers and GLP-1 medications.
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 adversely impact 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.
Estimates Trend
The Zacks Consensus Estimate for fiscal 2024 revenues is pegged at $310.28 billion, indicating a 12.1% increase from the previous year’s level. The consensus mark for adjusted earnings per share is pinned at $27.62, implying a 6.5% year-over-year improvement.
McKesson Corporation Price
McKesson Corporation price | McKesson Corporation Quote
Stocks to Consider
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Cardinal Health, Inc. (CAH - Free Report) and Cencora (COR - Free Report) .
DaVita, carrying a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 35.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 32% year to date compared with the industry’s 6.3% growth.
Cardinal Health, carrying a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.9%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.6%.
CAH’s shares have risen 12% year to date compared with the industry’s 4.8% growth.
Cencora, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 9.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.7%.
Cencora’s shares have rallied 18% year to date compared with the industry’s 5.8% growth.