Analyst Michael Cherny of Leerink Partners reiterated a Buy rating on McKesson (MCK – Research Report), boosting the price target to $606.00.
Michael Cherny has given his Buy rating due to a combination of factors concerning McKesson’s recent developments and financial outlook. The acquisition of the OptumRx contract is a significant factor, augmenting McKesson’s operational momentum and positioning it as a strong growth story within the large cap sector. This contract win not only increases McKesson’s drug volumes and earnings potential but also solidifies the company’s long-term EBIT and EPS growth targets, effectively reducing investment risk. Cherny believes that this could enable McKesson to exceed its initial Fiscal Year 2025 Pharmacy EBIT growth projection of 5-7%, which could be further clarified in the upcoming earnings report.
In the wake of McKesson’s contract win, Cherny has updated the firm’s financial model, adjusting the EPS estimates for Fiscal Years 2025 and 2026 upwards, reflecting a modest yet significant incremental growth in earnings per share. The anticipated new contract, despite potentially being smaller than Cardinal Health’s previous engagement, is expected to contribute approximately 100-150 basis points to McKesson’s EPS growth. This estimate serves as a preliminary baseline until more details emerge. Reaffirming his confidence in McKesson’s performance, Cherny maintains an Outperform rating and a $606 price target, based on a consistent earnings multiple projection.
In another report released on April 22, Bank of America Securities also maintained a Buy rating on the stock with a $566.00 price target.
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McKesson (MCK) Company Description:
Incorporated in 1833, Texas-based McKesson Corp. provides pharmaceuticals, health information technology, medical supplies, and care management tools. The company operates through four segments: U.S. Pharmaceutical, Prescription Technology Solutions, International, and Medical-Surgical Solutions.
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