McKesson’s Upcoming Q4 Earnings Preview

McKesson (NYSE:MCK) saw its shares decline nearly 2% in pre-market today after posting third-quarter earnings and revenue that fell short of analyst expectations. Despite the miss, the pharmaceutical distributor raised its full-year earnings guidance, signaling confidence in its long-term momentum.

For the quarter, McKesson reported adjusted earnings per share of $8.03, below the analyst forecast of $8.27. Revenue climbed 18% year-over-year to $95.29 billion but came in slightly under the expected $95.77 billion.

While the weaker-than-expected results weighed on investor sentiment, the company revised its fiscal 2025 guidance upward, tightening its adjusted EPS forecast to a range of $32.55 to $32.95 from its prior estimate of $32.40 to $33.00. The new midpoint of $32.75 now slightly exceeds Wall Street’s consensus of $32.67.

McKesson’s U.S. Pharmaceutical segment, its largest revenue driver, delivered a 19% increase to $87.1 billion, fueled by rising prescription volumes and expansion within its oncology platform.

Additionally, the company announced a strategic move to bolster its presence in vision care, securing an 80% controlling stake in PRISM Vision Holdings, LLC, a provider of ophthalmology and retina management services.

Although the earnings miss triggered a pullback in shares, McKesson’s continued revenue growth and strategic expansion suggest underlying strength as it looks ahead to 2025.

McKesson (NYSE:MCK) saw its shares decline nearly 2% in pre-market today after posting third-quarter earnings and revenue that fell short of analyst expectations. Despite the miss, the pharmaceutical distributor raised its full-year earnings guidance, signaling confidence in its long-term momentum.

For the quarter, McKesson reported adjusted earnings per share of $8.03, below the analyst forecast of $8.27. Revenue climbed 18% year-over-year to $95.29 billion but came in slightly under the expected $95.77 billion.

While the weaker-than-expected results weighed on investor sentiment, the company revised its fiscal 2025 guidance upward, tightening its adjusted EPS forecast to a range of $32.55 to $32.95 from its prior estimate of $32.40 to $33.00. The new midpoint of $32.75 now slightly exceeds Wall Street’s consensus of $32.67.

McKesson’s U.S. Pharmaceutical segment, its largest revenue driver, delivered a 19% increase to $87.1 billion, fueled by rising prescription volumes and expansion within its oncology platform.

Additionally, the company announced a strategic move to bolster its presence in vision care, securing an 80% controlling stake in PRISM Vision Holdings, LLC, a provider of ophthalmology and retina management services.

Although the earnings miss triggered a pullback in shares, McKesson’s continued revenue growth and strategic expansion suggest underlying strength as it looks ahead to 2025.

Deutsche Bank analysts provided their outlook on McKesson Corporation (NYSE:MCK) ahead of the company’s upcoming Q4/23 earnings release, scheduled on May 8.

The company should provide initial 2024 guidance. The current Street estimates stand at $26.22 for 2024 EPS, which represents very modest low-single-digit EPS growth compared with the company’s 2023 EPS guidance range of $25.75-$26.15.

While this growth would be below the company’s long-term EPS growth target in the range of 12%-14% EPS growth, the company has several large contributors to EPS in 2023 that when backed out, sets a lower core starting base for 2024 guide to be within long-term growth trend.

The analysts reiterated their Buy rating and $430 price target on the stock.