McKesson Corporation (MCK) is scheduled to report third-quarter fiscal 2025 results on Feb. 5, after market close.The company delivered an earnings surprise of 2.61% in the last reported quarter. Its earnings beat estimates in three of the trailing four quarters and missed once, delivering an average surprise of 4.99%.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.McKesson’s revenue growth has been driven largely by the rapid adoption of GLP-1 weight loss drugs and sustained demand ...

Wall Street analysts forecast that McKesson (MCK) will report quarterly earnings of $8.11 per share in its upcoming release, pointing to a year-over-year increase of 4.8%. It is anticipated that revenues will amount to $95.46 billion, exhibiting an increase of 18% compared to the year-ago quarter.The current level reflects an upward revision of 1.5% in the consensus EPS estimate for the quarter over the past 30 days. This demonstrates how the analysts covering the stock have collectively reappraised their i ...

Stock Performance - McKesson's stock ended at $602 95, marking a -0 24% decline from the previous day's close [1] - Over the past month, McKesson's shares gained 5 9%, outperforming the Medical sector's 3 83% gain and the S&P 500's 0 81% gain [1] Earnings and Revenue Projections - McKesson is scheduled to release its earnings on February 5, 2025, with projected EPS of $8 19, a 5 81% increase from the same quarter last year [2] - Revenue for the upcoming quarter is projected at $95 46 billion, up 18% year-over-year [2] - For the entire year, earnings are forecasted at $32 72 per share, a 19 24% increase, and revenue at $358 91 billion, a 16 17% increase compared to the previous year [3] Analyst Estimates and Valuation - Recent adjustments to analyst estimates reflect short-term business dynamics, with positive changes indicating a favorable outlook on the company's profitability [4] - McKesson currently has a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate decreasing by 0 02% over the past month [6] - The company's Forward P/E ratio is 18 47, in line with the industry average [7] - McKesson's PEG ratio is 1 31, lower than the Medical - Dental Supplies industry average of 2 1 [8] Industry Context - The Medical - Dental Supplies industry, part of the Medical sector, has a Zacks Industry Rank of 137, placing it in the bottom 46% of over 250 industries [8] - The Zacks Industry Rank shows that the top 50% of industries outperform the bottom half by a factor of 2 to 1 [9]

Company Performance - McKesson's stock closed at $586.08, reflecting a -1.1% change from the previous day, underperforming the S&P 500's gain of 0.88% [1] - Over the past month, McKesson's stock has increased by 2.74%, while the Medical sector has seen a loss of 0.32% and the S&P 500 has gained 1.17% [1] Upcoming Earnings - McKesson's earnings report is anticipated on February 5, 2025, with projected earnings per share (EPS) of $8.28, indicating a 6.98% increase from the same quarter last year [2] - Revenue is expected to reach $95.46 billion, reflecting an 18% growth compared to the same quarter of the previous year [2] Fiscal Year Projections - For the entire fiscal year, earnings are projected at $32.73 per share and revenue at $358.91 billion, representing increases of +19.28% and +16.17% respectively from the prior year [3] Analyst Estimates - Recent changes to analyst estimates for McKesson are significant as they reflect the evolving business trends, with positive revisions indicating analysts' confidence in the company's performance [4] - The Zacks Rank system, which evaluates estimate changes, currently ranks McKesson at 3 (Hold) [6] Valuation Metrics - McKesson has a Forward P/E ratio of 18.11, which aligns with its industry's Forward P/E of 18.11, indicating no significant deviation [7] - The company holds a PEG ratio of 1.28, compared to the average PEG ratio of 2 for the Medical - Dental Supplies industry [8] Industry Context - The Medical - Dental Supplies industry, part of the Medical sector, has a Zacks Industry Rank of 150, placing it in the bottom 41% of over 250 industries [9]

Core Viewpoint - The article discusses the reliability of brokerage recommendations, particularly focusing on McKesson (MCK), and highlights the potential misalignment of interests between brokerage firms and retail investors [1][4]. Group 1: Brokerage Recommendations - McKesson has an average brokerage recommendation (ABR) of 1.38, indicating a consensus between Strong Buy and Buy, based on 16 brokerage firms [2]. - Out of the 16 recommendations, 13 are Strong Buy, accounting for 81.3% of all recommendations [2]. - Despite the positive ABR, relying solely on this information for investment decisions may not be advisable, as studies suggest brokerage recommendations often fail to guide investors effectively [4]. Group 2: Analyst Bias and Zacks Rank - Brokerage analysts tend to exhibit a strong positive bias in their ratings due to vested interests, with a ratio of five "Strong Buy" recommendations for every "Strong Sell" [5][9]. - The Zacks Rank, which is based on earnings estimate revisions, is presented as a more reliable indicator of near-term stock performance compared to ABR [7][10]. - The Zacks Rank is timely and reflects the latest earnings estimates, while ABR may not always be up-to-date [11]. Group 3: Current Earnings Estimates for McKesson - The Zacks Consensus Estimate for McKesson's earnings for the current year remains unchanged at $32.73, suggesting stable analyst views on the company's earnings prospects [12]. - The recent change in consensus estimates, along with other factors, has resulted in a Zacks Rank of 3 (Hold) for McKesson, indicating a cautious approach despite the positive ABR [13].

Core Insights - McKesson (MCK) has started 2025 positively, with a 4% stock increase in January, driven by optimism regarding its performance and strategic focus on oncology and biopharma services [1][9] - The company reported strong second-quarter fiscal 2025 results, with U.S. Pharmaceutical segment revenues soaring 23% year over year to $85.7 billion, largely due to the growth of GLP-1 medications [10] - McKesson's strategic initiatives, including investments in technology and divestitures, are expected to enhance operational efficiency and focus on high-margin areas [2][17] Financial Performance - The U.S. Pharmaceutical segment's adjusted operating profit increased 11% to $902 million, supported by rising prescription volumes and the expansion of oncology services [10] - The International segment reported revenues of $3.7 billion, up 7% year over year, driven by higher pharmaceutical distribution volumes in Canada [11] - The Medical-Surgical Solutions segment grew 4% to $2.9 billion, with increased specialty pharmaceutical volumes partially offsetting challenges [12] - Prescription Technology Solutions (RxTS) revenues grew 11% to $1.3 billion, with automated prior authorizations saving patients over $2 billion in the second quarter [13] Strategic Focus - McKesson's focus on oncology and biopharma services is a major growth driver, with the U.S. Oncology Network expanding to over 3,300 providers [18] - The company is leveraging its scale and operational efficiency to enhance medication access and affordability through RxTS [17] - Strategic divestitures, including the sale of Rexall and Well.ca, are aimed at streamlining operations and reallocating resources to high-margin segments [2][18] Market Position - McKesson's stock is trading at a forward P/E of 16.5X, lower than the Medical Dental Supplies industry's 17.53X, indicating a favorable valuation [17] - The Medical-Dental Supplies industry has outperformed the broader medical sector and the S&P 500 Index, suggesting rising growth potential [4] Challenges - McKesson faces regulatory uncertainties, inflationary pressures, and potential supply-chain disruptions, which could impact margins and market share [3] - The Medical-Surgical Solutions segment reported a 4% decline in adjusted operating profit due to reduced primary care demand as market conditions normalized post-COVID-19 [21] - Rising operational costs in the U.S. Pharmaceutical segment have partially offset gains from other areas, impacting overall performance [22][23]

Company Performance - McKesson's stock closed at $585.08, with a daily increase of +0.57%, outperforming the S&P 500's gain of 0.16% [1] - Over the last month, McKesson's shares increased by 0.95%, while the Medical sector experienced a loss of 5.3% and the S&P 500 lost 2.2% [1] Upcoming Earnings - McKesson is set to disclose its earnings on February 5, 2025, with an expected EPS of $8.28, reflecting a 6.98% increase from the same quarter last year [2] - The revenue forecast for the upcoming earnings report is $95.46 billion, indicating an 18% growth compared to the same quarter of the previous year [2] Annual Estimates - For the annual period, the Zacks Consensus Estimates predict earnings of $32.73 per share and revenue of $358.91 billion, representing increases of +19.28% and +16.17% respectively from the previous year [3] - Recent changes in analyst estimates suggest a positive outlook for McKesson's business performance and profit potential [3] Valuation Metrics - McKesson has a Forward P/E ratio of 17.78, which is lower than the industry average Forward P/E of 18.04, indicating a potential valuation discount [5] - The company also has a PEG ratio of 1.26, compared to the Medical - Dental Supplies industry's average PEG ratio of 1.94, suggesting favorable growth expectations relative to its valuation [6] Industry Context - The Medical - Dental Supplies industry, which includes McKesson, holds a Zacks Industry Rank of 61, placing it in the top 25% of over 250 industries [7] - The Zacks Industry Rank indicates that the top 50% rated industries outperform the bottom half by a factor of 2 to 1, highlighting the strength of the industry [7]

Group 1: Twilio (TWLO) - Twilio enables developers to build, scale, and operate real-time communications within software applications [1] - The company has a Zacks Rank of 1 (Strong Buy) [1] - The Zacks Consensus Estimate for its current year earnings has increased by 6.7% over the last 60 days [1] - Twilio has a PEG ratio of 0.69 compared to the industry average of 1.84 [2] - The company possesses a Growth Score of A [2] Group 2: McKesson (MCK) - McKesson is a healthcare services and information technology company that distributes branded and generic pharmaceutical drugs globally [2] - The company carries a Zacks Rank of 1 (Strong Buy) [2] - The Zacks Consensus Estimate for its current year earnings has increased by 2.3% over the last 60 days [2] - McKesson has a PEG ratio of 1.23 compared to the industry average of 3.62 [3] - The company possesses a Growth Score of A [3] Group 3: ZIM Integrated Shipping Services (ZIM) - ZIM is a global container liner shipping company providing container shipping and related services internationally [3] - The company has a Zacks Rank of 1 (Strong Buy) [3] - The Zacks Consensus Estimate for its current year earnings has increased by 36.1% over the last 60 days [3] - ZIM has a PEG ratio of 0.04 compared to the industry average of 0.48 [4] - The company possesses a Growth Score of B [4]

Core Viewpoint - McKesson Corporation is positioned for growth due to its strong Biologics business and improving healthcare demand, despite facing competition and weaker pricing trends in the generic pharmaceutical sector [1][3]. Company Performance - McKesson's shares have increased by 25.6% over the past year, outperforming the industry growth of 3.5% and the S&P 500's gain of 28.3% [1]. - The company has a market capitalization of $72.36 billion and projects a growth rate of 14.1% over the next five years [2]. - McKesson's earnings have surpassed the Zacks Consensus Estimate in three of the last four quarters, with an average earnings surprise of 4.99% [2]. Growth Drivers - There is an improving demand for healthcare, particularly in surgeries, which is benefiting McKesson's volumes and sales [3]. - The distribution business is expected to benefit from higher volumes of specialty products and increased demand for extended and primary care [4]. - McKesson is actively pursuing acquisitions and strategic collaborations to drive growth, including a recent agreement to acquire a controlling interest in Core Ventures [5] and a collaboration with Datavant to enhance data accessibility [6]. Financial Performance - McKesson reported significant revenue growth in the second quarter, driven by the U.S. Pharmaceutical segment and increased prescription volumes [8]. - The international segment also saw revenue increases due to higher pharmaceutical distribution volumes in Canada [9]. - The company raised its adjusted earnings per share (EPS) guidance for fiscal 2025 to a range of $32.40-$33.00, indicating an 18-20% growth from the previous year [10]. Challenges - McKesson faced headwinds in fiscal Q2, including a 50 basis point contraction in gross margin and a decline in operating margin [11][12]. - The company is experiencing stiff competition in its Distribution Solutions segment, which affects pricing negotiations due to reliance on fewer suppliers [13]. Estimate Trends - There has been a positive estimate revision trend for McKesson, with the Zacks Consensus Estimate for EPS moving up by 0.6% to $32.73 [14]. - The consensus estimate for third-quarter fiscal 2025 revenues is projected at $95.46 billion, reflecting an 18% improvement year-over-year [14].

Industry Overview - The Zacks Medical - Dental Supplies industry is experiencing a consolidating trend in 2024, with stable dental patient traffic but a decline in discretionary spending on higher-cost procedures, impacting consumables demand [2][3] - The global dental industry is projected to reach $95.37 billion at a CAGR of 11.8% from 2023 to 2032, indicating potential growth opportunities for industry participants [3] - The industry consists of companies that design, develop, manufacture, and market dental products, including consumables and specialty items, and has shown recovery post-pandemic [4] Major Trends - The increasing burden of oral diseases and an aging population are driving the dental equipment market, with 55.8 million people aged 65 and above in the U.S. as of 2020, leading to higher demand for dental services [6] - There is a growing demand for esthetic and cosmetic dentistry, influenced by media and current trends, which is boosting the U.S. dental equipment market [7] - Technological advancements such as digital imaging and laser dentistry are enhancing treatment accuracy and effectiveness, contributing to market growth [8] Industry Performance - The dental supplies industry has underperformed compared to the broader medical sector and the S&P 500, with a collective gain of 4.2% over the past year, while the S&P 500 increased by 29.1% [12] - The industry is currently trading at a forward P/E of 17.3X, lower than the S&P 500's 22.6X and the sector's 21.2X, indicating a relatively undervalued position [13] Company Highlights - Cardinal Health (CAH) is experiencing strong demand for its Pharmaceutical and Specialty solutions, with expected EPS for fiscal 2025 in the range of $7.75-$7.90, reflecting growth from previous estimates [17][18] - Merit Medical Systems (MMSI) is seeing revenue growth across its segments, with projected total revenue growth of 6.9-7.6% for 2024 and an adjusted EPS range of $3.33-$3.38 [22][23] - Becton, Dickinson and Co. (BD) reported solid top-line results with expected adjusted EPS for fiscal 2025 in the range of $13.05-$13.15, indicating a year-over-year improvement [27][28] - McKesson is experiencing significant growth driven by its U.S. Pharmaceutical segment, with adjusted EPS guidance raised to $32.40-$33.00 for fiscal 2025, representing an 18-20% growth from the prior year [32][33]