Core Insights - McKesson Corporation is positioned for growth due to its strong Biologics business and positive fiscal Q1 2025 performance, despite facing competition and pricing pressures in the generic pharmaceutical market [1] - Over the past year, McKesson shares have increased by 36.1%, outperforming the industry and the S&P 500 [1] - The company has a market capitalization of $64.64 billion and anticipates a 13.4% growth over the next five years [1] Growth Drivers - The Biologics segment is a key growth area, with recent partnerships enhancing its market position, including exclusive agreements with Sentynl Therapeutics and Geron Corporation [2] - McKesson is actively pursuing acquisitions and divestitures to focus on oncology and biopharma services, including the sale of its Rexall and Well.ca businesses and acquiring a controlling interest in Core Ventures [3][4] Financial Performance - McKesson's fiscal Q1 2025 results were mixed, with earnings exceeding estimates but revenues falling short, driven by strong demand in the U.S. pharmaceutical segment [4] - The company experienced a decline in gross profit and margin, attributed to lower COVID-19-related sales and divestitures in Europe [5] Market Challenges - The Distribution Solutions segment faces significant competition from various wholesalers and logistics companies, limiting pricing negotiation power due to reliance on fewer suppliers [5] - Despite these challenges, McKesson has seen a positive estimate revision trend, with a 1.9% increase in the Zacks Consensus Estimate for earnings per share over the past 90 days [6] Revenue Projections - The Zacks Consensus Estimate for Q2 fiscal 2025 revenues is projected at $89.57 billion, reflecting a 16% increase from the previous year [6]

Core Viewpoint - McKesson Corporation has experienced a significant stock price decline recently, but its long-term performance remains strong, with a 2,700% return since January 2000, outperforming both the healthcare ETF and the S&P 500 [2][4]. Company Overview - McKesson, founded in 1833, has a market cap of $67 billion and is recognized for its role in improving health outcomes by partnering with various stakeholders in the healthcare sector [5]. - The company operates through four main segments: U.S. Pharmaceuticals, Prescription Technology Solutions, Medical-Surgical Solutions, and International operations [5][6]. Business Segments - **U.S. Pharmaceuticals**: This segment generated $72 billion in revenues in Q1 of fiscal 2025, providing distribution services for a wide range of drugs and serving about one-third of all pharmaceuticals in the U.S. [5][6]. - **Prescription Technology Solutions (RxTS)**: Focuses on medication access and affordability, helping patients save $8.8 billion on medications in fiscal 2024, with an 18% operating margin in Q1 2025 [6]. - **Medical-Surgical Solutions**: Provides medical supply distribution services to over 285,000 customers, including physician offices and nursing homes [6]. - **International Operations**: Includes pharmaceutical distribution in Canada and Europe, with nearly 2,700 pharmacies in Canada [6]. Competitive Position - McKesson has a "narrow moat" due to high switching costs and strong relationships with key customers like CVS, which accounted for approximately 28% of its 2024 sales [7]. - The company faces competition from Cencora and Cardinal Health, but has outperformed these competitors over the past five years [7]. Financial Performance - In Q1 of fiscal 2025, McKesson reported $79.3 billion in sales, a 6% increase from the previous year, and raised its full-year EPS guidance from $31.25-$32.05 to $31.75-$32.55 [10][11]. - The company is integrating AI into its operations to improve efficiency and reduce costs, contributing to margin growth [10][11]. Shareholder Returns - McKesson's board approved a 15% increase in its quarterly dividend to $0.71 per share, supported by a low payout ratio of 9% and a five-year dividend CAGR of 10.2% [19][21]. - The company has a buyback authorization of $10 billion, representing about 15% of its market cap [21]. Valuation - McKesson's stock trades at a blended P/E ratio of 15.7x, with expected EPS growth of 17% this year, making it attractive compared to its peers [23]. - A fair stock price estimate of $640 suggests a potential upside of 23% from the current price [23]. Investment Outlook - The recent stock sell-off presents a compelling opportunity for long-term investors, with McKesson's strong position in healthcare distribution and focus on technology supporting sustainable growth [26]. - Despite short-term headwinds, the company's solid business model and shareholder return strategies enhance its investment appeal [27].

Company Performance - McKesson's stock closed at $518.81, reflecting a +1.49% change from the previous trading day, outperforming the S&P 500's daily gain of 0.54% [1] - Over the past month, McKesson shares have decreased by 6.28%, underperforming compared to the Medical sector's gain of 4.37% and the S&P 500's gain of 4.86% [1] - The upcoming earnings report is expected to show an EPS of $7.20, which is a 15.57% increase from the same quarter last year, with projected net sales of $89.57 billion, up 16% year-over-year [1] Annual Estimates - For the annual period, the Zacks Consensus Estimates predict earnings of $32.11 per share and revenue of $353.29 billion, representing increases of +17.02% and +14.35% respectively from the previous year [2] - Recent revisions to analyst forecasts for McKesson are crucial as they indicate changing business trends, with upward revisions reflecting analysts' positive outlook on the company's operations [2] Valuation Metrics - McKesson has a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate increasing by 2.25% over the last 30 days [3] - The company is currently trading at a Forward P/E ratio of 15.92, which is lower than the industry average Forward P/E of 18.64 [3] - McKesson's PEG ratio stands at 1.18, compared to the Medical - Dental Supplies industry's average PEG ratio of 1.91 [3] Industry Context - The Medical - Dental Supplies industry, part of the Medical sector, has a Zacks Industry Rank of 201, placing it in the bottom 21% of over 250 industries [4] - Research indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [4]

Company Performance - McKesson's stock closed at $511.17, reflecting a +0.14% change from the previous trading day, which lagged behind the S&P 500's gain of 0.75% [1] - Over the last month, McKesson's shares decreased by 7.67%, underperforming the Medical sector's gain of 3.55% and the S&P 500's gain of 4.03% [1] - The upcoming earnings report is expected to show an EPS of $7.20, a 15.57% increase year-over-year, with quarterly revenue anticipated at $89.57 billion, up 16% from the previous year [1] Annual Estimates - For the annual period, the Zacks Consensus Estimates predict earnings of $32.11 per share and revenue of $353.29 billion, representing increases of +17.02% and +14.35% respectively from the last year [2] - Recent adjustments to analyst estimates indicate a positive outlook for McKesson's business operations and profitability [2] Valuation Metrics - McKesson has a Forward P/E ratio of 15.9, which is lower than the industry's average Forward P/E of 18.11 [3] - The company has a PEG ratio of 1.18, compared to the average PEG ratio of 1.88 for the Medical - Dental Supplies industry [3] Industry Context - The Medical - Dental Supplies industry ranks in the bottom 31% of all industries, with a current Zacks Industry Rank of 176 [4] - The strength of industry groups is measured by the Zacks Industry Rank, which indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1 [4]

Core Viewpoint - McKesson Corporation has agreed to sell its Rexall and Well.ca businesses to Birch Hill Equity Partners, aligning with its strategy to focus on oncology and biopharma services while continuing to support the Canadian healthcare market through distribution [1][2]. Group 1: Sale Details - The sale of Rexall and Well.ca will allow McKesson to streamline operations and prioritize investments in high-growth areas [2]. - Birch Hill Equity Partners will invest in expanding Rexall and Well.ca, enhancing their services across more locations in Canada, while McKesson Canada will remain their wholesale distribution supplier until the transaction is finalized [3]. Group 2: Market Prospects - The healthcare services market is projected to grow from $8.96 trillion in 2024 to $10.91 trillion by 2028, at a CAGR of 5% [4]. - Key growth drivers include the expansion of telehealth, addressing workforce shortages, health equity initiatives, and the adoption of value-based care models [4]. Group 3: Stock Performance - McKesson's shares have increased by 11.2% year to date, outperforming the industry growth of 2.5% and the S&P 500's rise of 15.7% [5].

Market Overview - The S&P 500 declined by 0.3% on September 5, marking its third consecutive day in negative territory, while the Dow fell by 0.5% and the Nasdaq rose by 0.3% [1] - The latest ADP jobs data indicated a smaller-than-expected increase in private payrolls for August, contributing to concerns about the labor market ahead of the upcoming Bureau of Labor Statistics employment report [1] McKesson - McKesson's shares dropped by 9.9%, the largest decline among S&P 500 stocks, following the announcement of lower-than-expected profit guidance for Q2 and plans to sell its Canada-based businesses, Rexall and Well.ca, to Birch Hill Equity Partners [2] - The company stated that the divestiture will enable it to focus on investments in oncology and biopharma services [2] Zimmer Biomet - Zimmer Biomet's shares fell by 8.7% after executives warned that the implementation of a new enterprise resource planning (ERP) system could negatively impact performance in the second half of 2024, affecting production and shipping processes [2] Copart - Copart reported mixed results for its fiscal Q4 2024, with shares declining by 6.7%. Revenue increased year-over-year but net income fell short of forecasts due to rising operating expenses [3] Dollar Tree - Dollar Tree's shares surged by 7.7%, recovering partially from a previous 22% drop. The retailer missed earnings estimates and lowered its full-year guidance, citing strong macroeconomic headwinds [3] Marketaxess Holdings - Marketaxess Holdings saw its shares increase by 6.7% after reporting strong growth in trading volume for August, particularly in U.S. high-grade credit and municipal bonds [4] Tesla - Tesla's shares rose by 4.9% as the company announced plans to launch its full self-driving technology in Europe and China in Q1 2025, pending regulatory approval. CEO Elon Musk's comments regarding Tesla's robotics unit also garnered attention [4]

McKesson Corporation (NYSE:MCK) Wells Fargo 2024 Healthcare Conference September 5, 2024 8:45 AM ET Company Participants Britt Vitalone - Executive Vice President and Chief Financial Officer Conference Call Participants Stephen Baxter - Wells Fargo Stephen Baxter Good morning. I'm Steve Baxter, the Healthcare Services Analyst at Wells Fargo. We're really pleased to have McKesson with us today. As I'm sure you know, McKesson is the largest drug distributor in the United States, also operates Pharma Services ...

Core Viewpoint - McKesson (MCK) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][2]. Earnings Outlook - The Zacks Consensus Estimate projects McKesson to earn $32.02 per share for the fiscal year ending March 2025, reflecting a year-over-year increase of 16.7% [5]. - Over the past three months, the consensus estimate for McKesson has risen by 1.8%, indicating a trend of increasing earnings estimates [5]. Impact of Earnings Estimates - Changes in a company's earnings potential, as shown by earnings estimate revisions, are strongly correlated with short-term stock price movements [3]. - Institutional investors utilize earnings estimates to assess the fair value of stocks, leading to buying or selling actions that affect stock prices [3]. Zacks Rating System - The Zacks Rank system categorizes stocks based on earnings estimate revisions, with a proven track record of Zacks Rank 1 stocks yielding an average annual return of +25% since 1988 [4]. - McKesson's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting a strong potential for market-beating returns in the near term [7].

Core Viewpoint - Analyst recommendations, particularly for McKesson (MCK), show a strong bias towards positive ratings, which may not always align with retail investors' interests [1][3][5]. Group 1: Analyst Recommendations - McKesson has an average brokerage recommendation (ABR) of 1.41, indicating a consensus between Strong Buy and Buy, with 75% of recommendations being Strong Buy [1]. - Out of 16 recommendations, 12 are Strong Buy and one is Buy, reflecting a significant positive bias from brokerage analysts [1][2]. - Studies indicate that brokerage recommendations have limited success in guiding investors towards stocks with the best price increase potential, often due to the vested interests of brokerage firms [2][5]. Group 2: Zacks Rank vs. ABR - Zacks Rank is a proprietary stock rating tool that categorizes stocks based on earnings estimate revisions, providing a more reliable indicator of near-term stock performance compared to ABR [3][4]. - The Zacks Rank is displayed in whole numbers (1 to 5) and is driven by earnings estimate revisions, while ABR is calculated based on brokerage recommendations and may not be up-to-date [4][6]. - The Zacks Consensus Estimate for McKesson has increased by 1.3% over the past month to $32.02, contributing to a Zacks Rank 2 (Buy) for the company [7]. Group 3: Investment Implications - The growing optimism among analysts regarding McKesson's earnings prospects, reflected in the upward revisions of EPS estimates, suggests potential for stock price appreciation [7]. - The Buy-equivalent ABR for McKesson can serve as a useful guide for investors, but it is advisable to validate it with other analytical tools like Zacks Rank [7].

McKesson Corporation (MCK) , on Monday, inked a definitive agreement to acquire a controlling interest (representing approximately 70% ownership) in Community Oncology Revitalization Enterprise Ventures, LLC (Core Ventures), subject to customary closing conditions. Florida Cancer Specialists & Research Institute, LLC (“FCS”) physicians will retain a minority interest in Core Ventures.Core Ventures, a business and administrative services organization, was established by FCS.Following the completion of the tr ...