McKesson Reiterates Fiscal 2014 Guidance - Analyst Blog

By Zacks | July 01, 2013 AAA

McKesson Corporation (MCK) reiterated its earnings guidance for fiscal 2014 (ending Mar 31, 2014) at its analyst day on Jun 26, 2013.

McKesson continues to expect earnings (excluding special items) from continuing operations in the range of $7.90-$8.20 per share in fiscal 2014. The Zacks Consensus Estimate for fiscal 2014 currently stands at $8.07, within management’s guidance.

McKesson expects pharmaceutical distribution business to double in the next decade. On the fourth quarter fiscal 2013 earnings conference call, McKesson stated that it expects revenue in its major segment, Distribution Solutions, to rebound due to addition of PSS Medical, and increased demand from existing customers.

We note that McKesson completed its acquisition of PSS World Medical in Feb 2013. PSS World Medical was merged with McKesson’s Medical Surgical Distribution business.

We are impressed by the company’s efforts to broaden its portfolio through strategic acquisitions. The addition of PSS Medical business should boost the portfolio. However, generic launches are expected to be slower in 2013 compared to 2012. Fiscal 2014 will be challenging due to the low level of generic launches. Nevertheless, McKesson expects generics to grow by 2% – 4% in the next several years.

Moreover, growth in the Technology Solutions segment is also expected to accelerate from fiscal 2013 levels primarily due to the impact of acquisitions.

McKesson undertook a number of strategic actions in the fourth quarter of fiscal 2013 to combat the challenges that it expects to face in fiscal 2014.

McKesson decided to exit to minority investment in Nadro, a privately held pharmaceutical distributor in Mexico, where the company has a 49% stake. McKesson has also decided to realign its structure in the Technology Solutions segment to focus on its core competencies.

Meanwhile, the search for a new chief financial officer is on following the resignation of Jeffrey C. Campbell from the post.

McKesson currently carries a Zacks Rank #3 (Hold). Right now, AmerisourceBergen (ABC), Santarus, Inc. (SNTS) and Salix Pharmaceutical (SLXP) look well placed. While Salix Pharma and Santarus carry a Zacks Rank #1 (Strong Buy), AmerisourceBergen carries a Zacks Rank #2 (Buy).

comments powered by Disqus
Related Analysis
  1. Market Watchers Get a Breather - Ahead of Wall Street
    Stock Analysis

    Market Watchers Get a Breather - Ahead of Wall Street

  2. The Days of BABA Are Upon Us - Ahead of Wall Street
    Stock Analysis

    The Days of BABA Are Upon Us - Ahead of Wall Street

  3. Bull of the Day: Deckers (DECK) - Bull of the Day
    Stock Analysis

    Bull of the Day: Deckers (DECK) - Bull of the Day

  4. Bear of the Day: Copa (CPA) - Bear of the Day
    Stock Analysis

    Bear of the Day: Copa (CPA) - Bear of the Day

  5. U.S. Restaurants Slog Through a Weak Industry - Industry Outlook
    Stock Analysis

    U.S. Restaurants Slog Through a Weak Industry - Industry Outlook

Trading Center