McKesson (MCK) to Post Q2 Earnings: What's in the Offing?
McKesson Corporation’s MCK second-quarter fiscal 2021 results are scheduled to release on Nov 3, before the opening bell.
The company delivered an earnings surprise of 17.9% in the last reported quarter. Further, it beat estimates in each of the trailing four quarters, the average surprise being 7.4%.
Q2 Estimates
The Zacks Consensus Estimate for McKesson’s fiscal second-quarter earnings per share is pegged at $3.87, suggesting growth of 7.5% from the prior-year quarter. The same for revenues stands at $59.33 billion, indicating an improvement of 2.9% from the year-ago reported figure.
Factors to Note
McKesson expects fiscal second-quarter results to reflect segmental strength.
The U.S. Pharmaceutical and Specialty Solutions segment is likely to have acted as a key catalyst in the quarter to be reported. In fact, the consensus mark for this segment’s revenues is pegged at $48.05 billion, indicating an improvement of 4.5% from the prior-year quarter.
Notably, the segment may have benefited from branded pharmaceutical price increases and higher volumes from retail national account customers in the to-be-reported quarter. However, branded to generic conversions might have weighed on the segment’s performance. Nonetheless, the company’s broad spectrum of specialty biopharmaceutical providers and manufacturers are expected to have contributed to the fiscal second-quarter performance.
McKesson Corporation Price and EPS Surprise
McKesson Corporation price-eps-surprise | McKesson Corporation Quote
The COVID-19 pandemic resulted in the closure of dental practices and very low patient visits, which led to a weakened demand in the first half of the year. However, with the lifting of stay-at-home orders and easing of prior restrictions, dental market has slowly picked up pace. Hence, better-than-expected primary care visits and higher volumes of personal protective equipment (PPE) might have contributed to revenue growth in the Medical-Surgical solutions segment.
In fact, the consensus mark for this segment’s revenues is pegged at $2.23 billion, indicating an improvement of 8.5% from the prior-year quarter.
In August, McKesson announced the extension of its existing partnership with the Centers for Disease Control (CDC) to help the U.S. government’s Operation Warp Speed (OWS) team. With this collaboration, the company will become the centralized distributor of future COVID-19 vaccines and ancillary supplies required to administer vaccinations. As directed by the U.S. government, vaccines and related supplies will be delivered to point-of-care sites across the country. Notably, OWS is a collaboration among components of the Department of Health and Human Services (HHS) and the Department of Defense.
This positive development may get reflected in the fiscal second-quarter results.
McKesson Canada plays a crucial role in providing solutions to manufacturers, pharmacies and hospitals, which cater to needs of patients in Canada every day. Additionally, McKesson Canada has broad specialty assets and capabilities and is well-positioned to capitalize on growth of specialty in the Canadian market. Sustained growth in Canadian operations is likely to get reflected in the company’s second-quarter fiscal 2021 results.
Earnings Whispers
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Earnings ESP: McKesson has an Earnings ESP of -1.39%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: McKesson carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
Zimmer Biomet Holdings, Inc. ZBH has an Earnings ESP of +4.10% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
GW Pharmaceuticals plc GWPH has an Earnings ESP of +9.65% and a Zacks Rank of 3.
Pacific Biosciences of California, Inc. PACB has an Earnings ESP of +15.39% and a Zacks Rank of 3.
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McKesson Corporation (MCK) : Free Stock Analysis Report
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GW Pharmaceuticals PLC (GWPH) : Free Stock Analysis Report
Zimmer Biomet Holdings, Inc. (ZBH) : Free Stock Analysis Report
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