McKesson Posts Q3 Beat and Raised Guidance; Shares Up 5%

McKesson (NYSE: MCK) shares gained almost 5% during the extended trading session on February 2, after the company delivered robust fiscal third-quarter results topping estimates, and raised its fiscal FY2022 guidance well above the analysts’ expectations.

The quarterly beat was driven by a strong contribution from the U.S. government’s COVID-19 vaccine distribution, robust performance across all segments, kitting and storage programs as well as a lower share count.

McKesson is a U.S.-based healthcare company involved in pharmaceutical distribution and provides health information technology, medical supplies, and care management tools.

Fiscal Q3 Beat

Adjusted earnings of $6.15 per share grew 34% year-over-year and significantly beat analysts’ expectations of $5.42 per share. The company reported earnings of $4.60 per share for the prior-year period.

Further, revenues jumped 10% year-over-year to $68.6 billion and exceeded consensus estimates of $66.42 billion.

The increase in revenues reflects growth in the U.S. Pharmaceutical segment, driven by higher volumes from retail national account customers and strong market growth, which offset branded-to-generic conversions.

Raised FY2022 EPS Guidance

Based on robust Q3 results as well as higher contributions from the U.S. government’s COVID-19 vaccine distribution programs, management raised the financial guidance for FY2022.

The company now forecasts adjusted earnings in the range of $23.55 to $23.95 per share, while the consensus estimate is pegged at $22.78 per share.

CEO Comments

Looking ahead, McKesson CEO, Brian Tyler, commented, “As a result of our underlying business performance across all segments, and our ongoing support of the COVID-19 response efforts, we are raising our previous guidance range for fiscal 2022 Adjusted Earnings per Diluted Share to $23.55 to $23.95.”

Wall Street’s Take

Overall, the stock has a Strong Buy consensus rating based on 11 Buys and 1 Hold. At the time of writing, the average McKesson stock forecast was $286.83, which implies 10.98% upside potential to current levels.

TipRanks’ Smart Score

MCK scores a “Perfect 10”  on TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.

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