Analyst Allen Lutz of Bank of America Securities reiterated a Buy rating on McKesson, boosting the price target to $850.00.
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Allen Lutz has given his Buy rating due to a combination of factors that highlight McKesson’s strong growth prospects. The company has set a higher earnings per share growth target of 13-16%, up from the previous 12-14%, driven by strategic investments in high-margin areas such as oncology, multispecialty, and biopharma. These sectors are expected to provide a long runway for growth, supported by McKesson’s relatively unlevered balance sheet, which reinforces confidence in achieving these ambitious targets.
Furthermore, McKesson is well-positioned to benefit from the ongoing consolidation in the specialty industry, particularly in oncology. The company anticipates robust growth in its oncology segment, which aligns with industry trends and the significant portion of pipeline drugs in this area. Additionally, McKesson’s Prescription Technology Solutions (RxTS) division is poised for growth through a strong pipeline of specialty drug launches and cross-selling opportunities. Despite some challenges in the MedSurg segment, McKesson’s track record of successful divestitures and strategic positioning provides a solid foundation for future growth.
According to TipRanks, Lutz is a 4-star analyst with an average return of 5.7% and a 60.62% success rate. Lutz covers the Healthcare sector, focusing on stocks such as Teladoc, Doximity, and CVS Health.
In another report released today, Morgan Stanley also reiterated a Buy rating on the stock with a $857.00 price target.