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McKesson (MCK) to Report Q2 Earnings: What's in the Offing?

Zacks Equity Research

McKesson Corporation’s MCK second-quarter fiscal 2020 results are scheduled to release on Oct 30.

In the last reported quarter, the company delivered a positive earnings surprise of 8.9%. Further, it has an average positive surprise of 6.6% for the trailing four quarters.

Let’s take a look at how things are shaping up prior to this announcement.

McKesson Corporation Price and EPS Surprise

 

McKesson Corporation Price and EPS Surprise

McKesson Corporation price-eps-surprise | McKesson Corporation Quote

Which Way Are Q2 Estimates Headed?

The Zacks Consensus Estimate for McKesson’s fiscal second-quarter earnings per share is pegged at $3.60. The same for revenues stands at $54.94 billion, suggesting growth of 3.5% from the year-ago reported figure.

Factors to Consider

McKesson expects its 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 last reported quarter, the segment had accounted for 79.3% of total revenues.

Notably, the segment is likely to benefit from branded, generic and over-the-counter pharmaceuticals. Also, the company’s broad spectrum of specialty biopharmaceutical providers and manufacturers are expected to have contributed majorly in the second quarter.

Apart from this, management is optimistic about contributions from the Medical-Surgical Solutions segment, driven by acquisitions and growth in the Primary Care and Extended Care businesses. Notably, the acquisition of Medical Specialties Distributor is expected to have proven accretive in the quarter to be reported.

Reflective of these, McKesson has raised its fiscal 2020 view. The company now expects adjusted earnings per share in the range of $14-$14.60 versus the previous $13.85-$14.45.

However, management expects the European Pharmaceutical Solutions unit’s adjusted operating profit growth to be at the low end of its original assumption, thanks to headwinds in Europe. Earlier, concerns in the U.K. had affected McKesson’s fiscal 2019 performance.

Earnings Whispers

Per our proven model, a stock needs to have a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) to deliver a positive earnings surprise. That is not the case here as you will see below.

Earnings ESP: McKesson has an Earnings ESP of -1.11%. 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 #2.  You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks Worth a Look

Here are a few medical stocks worth considering as they have the right combination of elements to post an earnings beat this quarter.

Edward Lifesciences Corporation EW has an Earnings ESP of +0.35% and a Zacks Rank #3.

AmerisourceBergen Corporation ABC has an Earnings ESP of +0.55% and a Zacks Rank #3.

Cardinal Health, Inc. CAH has an Earnings ESP of +1.50% and a Zacks Rank #3.

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