McKesson Is Deeply Discounted
The pharma distributor has a solid foundation and a bright outlook, in our opinion.
Despite the tumult that has engulfed its operating environment, we believe McKesson (MCK) will remain a key healthcare player and be able to produce outsize economic value. Its fiscal second quarter reflected a stabilization of near-term issues as the company reported earnings above consensus and raised the lower end of its full-year earnings per share guidance. After factoring in these latest results, we are reiterating our $210 fair value estimate and wide economic moat rating for the pharmaceutical distributor. Given the company’s current stock price, we believe McKesson presents an opportunity for investors to own a quality asset at a deeply discounted price.
While we believe there may be some material changes in how the U.S. pharmaceutical market operates over the next several years, the need to source and deliver drugs efficiently and cost-effectively will not change. We believe this fundamental factor has formed a strong foundation for McKesson, as its core drug wholesaling operations will be needed by both drug manufacturers and retail pharmacies no matter how any market dynamics shift.
Vishnu Lekraj does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.