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McKesson (MCK) to Report Q4 Earnings: What's in the Cards?

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McKesson Corporation’s (MCK - Free Report) fourth-quarter fiscal 2020 results are scheduled to release on May 20, before the opening bell.

The company delivered an earnings surprise of 7.63% in the last reported quarter. Its earnings surpassed estimates in each of the trailing four quarters, the average beat being 4.3%.

Q4 Estimates

The Zacks Consensus Estimate for McKesson’s fiscal fourth-quarter earnings per share is pegged at $4.09, suggesting growth of 10.8% from the prior-year period. The same for revenues stands at $55.40 billion, indicating an improvement of 5.7% from the year-ago reported figure.

Factors to Note

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

The U.S. Pharmaceutical and Specialty Solutions segment is likely to have acted as a key catalyst in the quarter to be reported.

Notably, the segment may have benefited from branded pharmaceutical price increases and higher volumes from retail national account customers in the to-be-reported quarter. However, branded to generic conversions might have weighed on the segment’s performance. Nonetheless, the company’s broad spectrum of specialty biopharmaceutical providers and manufacturers are expected to have contributed to the fiscal fourth-quarter performance.

Reflective of these, the Zacks Consensus Estimate for the segment’s fiscal fourth-quarter revenues is pegged at $42.94 billion, indicating growth of 4.8% 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 has been optimistic about contributions from the Medical-Surgical Solutions segment, courtesy of growth in the Primary Care business.

The Zacks Consensus Estimate for the segment’s fiscal fourth-quarter revenues stands at $2.05 billion, suggesting an improvement of 5% year over year.

During the fiscal third quarter, CoverMyMeds and RxCrossroads announced the launch of AMP (Access for More Patients), which is a first-in-class technology driven patient support solution that transforms how patients access afford and adhere to their medications.

On Dec 12, 2019, McKesson and Walgreens Boots Alliance announced an agreement to form a joint venture (JV) that is anticipated to combine their respective pharmaceutical wholesale businesses in Germany.

These positive developments are likely to have impacted the fiscal fourth-quarter performance.

McKesson Canada plays a crucial role in providing solutions to manufacturers, pharmacies and hospitals, which cater to the needs of patients in Canada every day. Additionally, McKesson Canada also has broad specialty assets and capabilities and is well-positioned to participate in the growth of specialty in the Canadian market. In the fiscal fourth quarter, the company is likely to have witnessed growth in Canadian operations.

However, it is important to note here that with the coronavirus outbreak intensifying around late February, elective procedures and other non-emergency healthcare activities might have taken a hit. Consequently, this is likely to have impacted the company’s performance in the to-be-reported quarter.

Earnings Whispers

Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Earnings ESP: McKesson has an Earnings ESP of -0.43%. 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 #3.

Stocks Worth a Look

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

HealthEquity, Inc. (HQY - Free Report) has an Earnings ESP of +3.32% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.

HEXO Corp. has an Earnings ESP of +25.00% and a Zacks Rank of 2.

Canopy Growth Corporation (CGC - Free Report) has an Earnings ESP of +8.09% and a Zacks Rank of 2.

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