- Despite lower-than-expected quarter results for the March quarter, McKesson (NYSE:MCK +6.1%) has reversed two days of losses after its fiscal 2022 guidance came ahead of expectations.
- The shares of the rivals AmerisourceBergen (NYSE:ABC +1.9%) and Cardinal Health (NYSE:CAH +3.0%) have also rebounded after their results for the previous quarter disappointed the market.
- McKesson guides its adjusted EPS for fiscal 2022 to range from ~$18.85 – 19.45 indicating ~111.3% YoY growth. The consensus EPS stands at $17.23 per share.
- It is a ~107.8% YoY growth even excluding the $0.50 – 0.70 per share benefit projected from the U.S. government’s COVID-19 vaccine distribution and kitting programs.
- Despite the pandemic-driven uncertainty on FY22 financials, “we do expect a return to pre-COVID levels of prescription volumes and patient engagement levels in the second half of fiscal 2022,” Brian Tyler CEO of McKesson said on the earnings call.
- The analysts have weighed in on the results with Deutsche Bank analyst George Hill noting: “The tone on MCK’s conference call and the company’s outlook appears to have been much more optimistic than its two-drug wholesaler peers.”
- With a buy rating, Hill has raised the price target on the stock to $237.00 from $231.00 per share implying ~28.0% upside to the previous close.
- Barclay’s analyst Steve Valiquette who has an overweight rating and a price target of $233.00 per share observes that 5 – 8% core EBIT growth estimated for the U.S. Pharmaceutical segment in FY22 as the key positive.
- The projection “dismisses much of the near-term concern around generic deflation,” Valiquette wrote.
- On the company’s recovery in FY22, Britt Vitalone McKesson CFO noted on the earnings call: “We anticipate a return to pre-COVID prescription and patient engagement levels in the second half of our fiscal 2022.”