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McKesson Corp MCK Stock Quote

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Morningstar‘s Stock Analysis MCK

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McKesson’s Streamlined Operations Demonstrate Resistance to Cost Inflation; Raising FVE to $336

Karen Andersen, CFA Sector Strategist

Analyst Note

| Karen Andersen, CFA |

McKesson posted solid growth in adjusted revenue and operating profit in its fiscal second quarter, lessening our concerns around cost inflation. In our model, we maintain our revenue growth estimate of 4.9% for the fiscal year, which falls within the guidance range of 3%-7%. However, we are raising our fair value estimate to $336 from $298 per share, as we have lowered our explicit forecast for selling, general, and administrative expenses as a percentage of revenue by 10 basis points because the firm is now fully divested of its Europe operations (save Norway) and is seeing the results of a streamlined operating margin. We have also slightly lowered our estimated share count to account for the trajectory of the share repurchase program.

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Company Profile MCK

Business Description

McKesson is a leading wholesaler of branded, generic, and specialty pharmaceutical products to pharmacies (retail chains, independent, and mail order), hospitals networks, and healthcare providers. Along with AmerisourceBergen and Cardinal Health, the three account for well over 90% of the U.S. pharmaceutical wholesale industry. McKesson is currently divesting from its pharmaceutical wholesale and distribution in Europe and Canada in order to redeploy capital to strategic growth areas in the U.S. (oncology network and ecosystem, and biopharma services). Additionally, the company supplies medical-surgical products and equipment to healthcare facilities and provides a variety of technology solutions for pharmacies.

6555 State Highway 161
Irving, TX, 75039
T +1 972 446-4800
Industry Medical Distribution
Most Recent Earnings Sep 30, 2022
Fiscal Year End Mar 31, 2023
Employees 75,000

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