McKesson shares surge as guidance, long-term targets impress

  • Stock Market News
McKesson shares surge as guidance, long-term targets impress
Credit: © Reuters.

Shares of McKesson (NYSE: MCK ), a health services company and pharmaceutical distributor, climbed Tuesday, surging by the most in over three years after it reported earnings and guidance that topped consensus.

Revenue for its fiscal fourth quarter climbed 4% to $68.9 billion and adjusted EPS was up 23% to $7.19. Both beat consensus estimates. It also issued 2024 guidance that beat Wall Street expectations, indicating strong growth. Additionally, McKesson lifted long-term targets for its U.S. Pharmaceutical, Prescription Technology Solutions and Medical-Surgical Solutions business segments.

At least seven banks raised their price target on the stock Tuesday morning. Leading the pack was research firm TD Cowen. It raised its price target on McKesson from $416 to a Street-high $491. Analysts were impressed by the company’s guidance, calling it “much better than expected.”

“We remain positive on MCK as FY24 guide $26.10-26.90 came in much better than expected, with midpoint $26.50 well above cons $25.90 and our $25.04, driven by expected growth in US Pharma and RxTS, and expected $3.5B share repo. Ex one-time FY23 items (incl COVID), midpoint implies FY24 adj EPS +11%-14%. In addition, MCK increased its LT growth targets indicating fundamentals continue to be strong,” said TD Cowen analysts.

Morgan Stanley analysts also weighed in on results, saying, “While MCK's F4Q print was operationally lower than expected, its 2024 guidance and increased long term profit targets should drive greater enthusiasm for the shares tomorrow on the additional clarity.”

Shares of McKesson climbed by as much as 8.5% before paring gains to around 6.5%.

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