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McKesson (MCK) to Report Q3 Earnings: What's in the Offing?

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McKesson Corporation’s MCK third-quarter fiscal 2020 results are scheduled to release on Feb 4, before market open.

For the last reported quarter, the company has an earnings surprise of 0.00%. Further, it has an average positive surprise of 4.2% for the trailing four quarters.

Let’s take a look at how things are shaping up prior to this announcement.

How Are Q3 Estimates Placed?

The Zacks Consensus Estimate for McKesson’s fiscal third-quarter earnings per share is pegged at $3.52, suggesting year-over-year growth of 3.5%. The same for revenues stands at $59.42 billion, indicating growth of 5.7% from the year-ago reported figure.

Factors to Consider

McKesson expects fiscal third-quarter results to reflect segmental strength.

The U.S. Pharmaceutical and Specialty Solutions segment is likely to have acted as a key catalyst.

Notably, the segment is likely to have benefited from branded, generic and over-the-counter pharmaceuticals. Also, the company’s broad spectrum of specialty biopharmaceutical providers and manufacturers are expected to have contributed majorly in the third quarter. Per management, the company’s ClarusONE Sourcing venture is also expected to have driven the segment substantially. Independent pharmacies, who are important customers for McKesson, are also believed to have aided U.S. Pharmaceutical and Specialty Solutions.

Reflective of these, the Zacks Consensus Estimate for the segment’s third-quarter revenues is pegged at $45.39 billion, calling for a rise of 2.5% year over year.

McKesson Corporation Price and EPS Surprise

 

McKesson Corporation Price and EPS Surprise

McKesson Corporation price-eps-surprise | McKesson Corporation Quote

Apart from this, management is optimistic about contributions from the Medical-Surgical Solutions segment, driven by acquisitions and growth in the Primary Care and Extended Care businesses. Notably, the takeover of Medical Specialties Distributor is expected to have proven accretive in the quarter to be reported.

The Zacks Consensus Estimate for the segment’s third-quarter revenues is pinned at $2.13 billion, suggesting 6% growth year over year.

Meanwhile, revenues at the European Pharmaceutical Solutions unit are expected to remain flat year over year, after a disappointing show in the last reported quarter. Notably, the Zacks Consensus Estimate for the segment’s third-quarter revenues stands at $6.91 billion. The company’s recent joint venture with MedTech giant Walgreens (WBA - Free Report) is expected to have boosted McKesson’s European Pharmaceutical Solutions segment. In fact, management at McKesson expects revenues to improve in Europe in the second half of fiscal 2020 compared to the first half.

Earnings Whispers

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. That is precisely the case here as you will see below.

Earnings ESP: McKesson has an Earnings ESP of +0.63%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: McKesson carries a Zacks Rank #2.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

DexCom DXCM has an Earnings ESP of +17.07% and a Zacks Rank #2.

AmerisourceBergen ABC has an Earnings ESP of +0.82% and a Zacks Rank #3.

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