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Here's Why You Should Invest in McKesson (MCK) Stock Now

Zacks Equity Research
Commercial Metals (CMC) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

McKesson Corporation's MCK third-quarter fiscal 2019 performance was commendable. The U.S. Pharmaceutical and Specialty Solutions unit also performed encouragingly. Management is optimistic about the 10-year partnership signed with Rite Aid.

With solid prospects, this Zacks Rank #2 (Buy) stock is an attractive pick for investors at the moment. In a month’s time, McKesson has gained 14.2% compared with the industry’s 13% growth.

Strong Player in Distribution Market

McKesson is a key player in the pharmaceutical and medical supplies distribution market.

In fiscal 2018, the company’s Distribution Solutions segment continued to deliver solid performance despite weak pricing trends and customer consolidation. Notably, this segment caters to a wide range of customers and businesses, and stands to benefit from increased generic utilization and an aging population.

It is encouraging to note that, Rite Aid renewed its distribution and sourcing relationship with McKesson for another 10 years in the fiscal third quarter. Additionally, McKesson launched its Opioid Foundation that will focus on helping advance solutions to the U.S. opioid crisis in the same period.

McKesson Canada Picks Up Pace

McKesson Canada plays a pivotal role in providing solutions to manufacturers, pharmacies and hospitals that serve the needs of patients in Canada every day.

Markedly, the segment rebounded in the fiscal third quarter. Evidently, McKesson Canada, a sub unit of the Other business segment of the company, saw a year-over-year upside in the quarter driven by high organic growth.

Which Way Are Estimates Trending?

The Zacks Consensus Estimate for fourth-quarter fiscal 2019 earnings is pegged at $3.68, mirroring 5.4% growth on a year-over-year basis. The same for revenues stands at $53.43 billion, reflecting a 3.5% improvement year over year.

For fiscal 2019, the Zacks Consensus Estimate for revenues is pinned at $215.02 billion, indicating 3.2% growth. The same for adjusted earnings is pegged at $13.51, showcasing a 7.1% rise year over year.

Want More from the MedTech Space?

A few other top-ranked stocks in the MedTech space are Surmodics, Inc. SRDX, Abbott Laboratories ABT and Cardiovascular Systems, Inc. CSII.

Surmodics has a long-term expected earnings growth rate of 10%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Abbott’s long-term earnings growth rate is projected at 11.7%. The stock carries a Zacks Rank #2.

Cardiovascular Systems exceeded the Zacks Consensus Estimate in each of the trailing four quarters, the average being 77.1%. The stock has a Zacks Rank of 1.

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Abbott Laboratories (ABT) : Free Stock Analysis Report
 
Cardiovascular Systems, Inc. (CSII) : Free Stock Analysis Report
 
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