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McKesson (MCK) Hits 52-Week High: What's Aiding the Stock?
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Shares of McKesson Corporation (MCK - Free Report) scaled a new 52-week high of $329.39 on Apr 14, before closing the session marginally lower at $323.25.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 66.9% compared with 5.2% growth of the industry and 5.5% rise of the S&P 500 composite.
McKesson is witnessing an upward trend in its stock price, prompted by its robust Biologics business. A solid third-quarter fiscal 2022 performance, along with its strategic deals, is expected to contribute further. However, stiff competition and weaker generic pharmaceutical pricing trends persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
Strength in Biologics: Investors are optimistic about McKesson’s robust Biologics business. Independent specialty pharmacy, Biologics by McKesson, has been making impressive progress of late. In March, the pharmacy was selected by CTI BioPharma Corp. as a specialty pharmacy provider for VONJO (pacritinib) for the treatment of intermediate or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis with platelet count below 50 × 109/L.
The same month, the pharmacy was selected by Agios Pharmaceuticals, Inc. as a specialty pharmacy provider for PYRUKYND (mitapivat) for the treatment of hemolytic anemia in adults with pyruvate kinase deficiency.
Strategic Deals: McKesson has inked some strategic deals over the past few months, raising investors’ optimism on the stock. The company, this month, closed the transaction (earlier announced in November 2021) to sell its U.K. businesses to AURELIUS. This is expected to enable the company to streamline its business and fully exit the European region.
Per the third-quarter fiscal 2022 earnings release, post an agreement in November 2021 to sell the remaining share of GEHE Pharma Handel and Alliance Healthcare Deutschland joint venture to Walgreens Boots Alliance, McKesson completed the transaction on Jan 31, 2022.
Strong Q3 Results: McKesson’s robust third-quarter fiscal 2022 results buoy optimism. The company recorded strong segmental performances by all of its segments. McKesson raising its earnings outlook for fiscal 2022 instills confidence in the stock. Double-digit adjusted operating profit growth across all segments is encouraging. The company’s crucial role in COVID-19 response efforts in the United States and abroad through the distribution of COVID-19 vaccines, ancillary supply kits and COVID-19 tests is impressive.
Downsides
Weak Trends: McKesson distributes generic pharmaceuticals, which are subject to price fluctuation. The Distribution Solutions segment continues to experience weaker generic pharmaceutical pricing trends. Continued volatility, unfavorable pricing trends, reimbursement of generic drugs, and significant fluctuations in the nature, frequency and magnitude of generic pharmaceutical launches could have a material adverse impact on McKesson.
Stiff Competition: Distribution Solutions faces stiff competition both in terms of price and service from various full-line, short-line and specialty wholesalers, service merchandisers, self-warehousing chains, manufacturers engaged in direct distribution, third-party logistics companies and large-payer organizations. Moreover, the company depends on fewer suppliers for its products. As a result, it is not in a position to negotiate pricing.
Key Picks
A few stocks from the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Abiomed, Inc. and Henry Schein, Inc. (HSIC - Free Report) .
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 20%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 36.9% against the industry’s 57.2% fall over the past year.
Abiomed, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 20%. ABMD’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.2%.
Abiomed has lost 7.1% compared with the industry’s 6.1% fall over the past year.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2.
Henry Schein has gained 29.3% compared with the industry’s 5.2% growth over the past year.
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McKesson (MCK) Hits 52-Week High: What's Aiding the Stock?
Shares of McKesson Corporation (MCK - Free Report) scaled a new 52-week high of $329.39 on Apr 14, before closing the session marginally lower at $323.25.
Over the past year, this Zacks Rank #3 (Hold) stock has gained 66.9% compared with 5.2% growth of the industry and 5.5% rise of the S&P 500 composite.
McKesson is witnessing an upward trend in its stock price, prompted by its robust Biologics business. A solid third-quarter fiscal 2022 performance, along with its strategic deals, is expected to contribute further. However, stiff competition and weaker generic pharmaceutical pricing trends persist.
Image Source: Zacks Investment Research
Let’s delve deeper.
Key Growth Drivers
Strength in Biologics: Investors are optimistic about McKesson’s robust Biologics business. Independent specialty pharmacy, Biologics by McKesson, has been making impressive progress of late. In March, the pharmacy was selected by CTI BioPharma Corp. as a specialty pharmacy provider for VONJO (pacritinib) for the treatment of intermediate or high-risk primary or secondary (post-polycythemia vera or post-essential thrombocythemia) myelofibrosis with platelet count below 50 × 109/L.
The same month, the pharmacy was selected by Agios Pharmaceuticals, Inc. as a specialty pharmacy provider for PYRUKYND (mitapivat) for the treatment of hemolytic anemia in adults with pyruvate kinase deficiency.
Strategic Deals: McKesson has inked some strategic deals over the past few months, raising investors’ optimism on the stock. The company, this month, closed the transaction (earlier announced in November 2021) to sell its U.K. businesses to AURELIUS. This is expected to enable the company to streamline its business and fully exit the European region.
Per the third-quarter fiscal 2022 earnings release, post an agreement in November 2021 to sell the remaining share of GEHE Pharma Handel and Alliance Healthcare Deutschland joint venture to Walgreens Boots Alliance, McKesson completed the transaction on Jan 31, 2022.
Strong Q3 Results: McKesson’s robust third-quarter fiscal 2022 results buoy optimism. The company recorded strong segmental performances by all of its segments. McKesson raising its earnings outlook for fiscal 2022 instills confidence in the stock. Double-digit adjusted operating profit growth across all segments is encouraging. The company’s crucial role in COVID-19 response efforts in the United States and abroad through the distribution of COVID-19 vaccines, ancillary supply kits and COVID-19 tests is impressive.
Downsides
Weak Trends: McKesson distributes generic pharmaceuticals, which are subject to price fluctuation. The Distribution Solutions segment continues to experience weaker generic pharmaceutical pricing trends. Continued volatility, unfavorable pricing trends, reimbursement of generic drugs, and significant fluctuations in the nature, frequency and magnitude of generic pharmaceutical launches could have a material adverse impact on McKesson.
Stiff Competition: Distribution Solutions faces stiff competition both in terms of price and service from various full-line, short-line and specialty wholesalers, service merchandisers, self-warehousing chains, manufacturers engaged in direct distribution, third-party logistics companies and large-payer organizations. Moreover, the company depends on fewer suppliers for its products. As a result, it is not in a position to negotiate pricing.
Key Picks
A few stocks from the broader medical space that investors can consider are AMN Healthcare Services, Inc. (AMN - Free Report) , Abiomed, Inc. and Henry Schein, Inc. (HSIC - Free Report) .
AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, the average surprise being 20%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
AMN Healthcare has gained 36.9% against the industry’s 57.2% fall over the past year.
Abiomed, carrying a Zacks Rank #2 (Buy), has an estimated long-term growth rate of 20%. ABMD’s earnings surpassed estimates in the trailing four quarters, the average surprise being 9.2%.
Abiomed has lost 7.1% compared with the industry’s 6.1% fall over the past year.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%. It currently has a Zacks Rank #2.
Henry Schein has gained 29.3% compared with the industry’s 5.2% growth over the past year.