Australia markets open in 2 hours 34 minutes
  • ALL ORDS

    7,148.60
    -52.10 (-0.72%)
     
  • AUD/USD

    0.6684
    -0.0004 (-0.05%)
     
  • ASX 200

    6,968.60
    -47.00 (-0.67%)
     
  • OIL

    69.29
    -1.61 (-2.27%)
     
  • GOLD

    1,998.20
    +48.60 (+2.49%)
     
  • Bitcoin AUD

    42,212.43
    +1,614.10 (+3.98%)
     
  • CMC Crypto 200

    616.71
    +19.25 (+3.22%)
     

McKesson (MCK) to Report Q3 Earnings: Is a Beat in the Cards?

McKesson Corporation MCK is scheduled to report third-quarter fiscal 2023 results on Feb 1, after the market close.

In the last reported quarter, the company delivered an earnings surprise of 9.8%. It beat estimates in three of the trailing four quarters and missed once, the average surprise being 13.00%.

Q3 Estimates

The Zacks Consensus Estimate for McKesson’s fiscal third-quarter earnings per share is pegged at $6.34, suggesting an improvement of 3.1% from the prior-year quarter's levels. The same for revenues stands at $70.48 billion, indicating an increase of 2.7% from the year-ago reported figure.

Factors to Note

McKesson’s fiscal third-quarter performance are expected to reflect segmental strength.

The U.S. Pharmaceutical and Specialty Solutions segment might have acted as a key growth driver in the quarter to be reported. The consensus mark for this segment’s revenues is pegged at $61.7 billion, indicating an improvement of 12.1% from the prior-year quarter.

The segment is likely to have benefited from market growth and higher volumes from retail national account customers in the to-be-reported quarter. However, branded-to-generic conversions might have weighed on the segment’s performance. Nevertheless, the company’s broad spectrum of specialty biopharmaceutical providers and manufacturers is likely to have contributed to the fiscal third-quarter performance.

Growth and improvement in the primary care business and contribution from kitting, storage, and distribution of ancillary supplies to the U.S. government's COVID-19 vaccine program are likely to have positively impacted the company’s Medical-Surgical Solutions segment.

McKesson’s collaboration with the U.S. government's COVID-19 vaccine distribution effort highlighted the company’s role in the COVID-19 response. It was selected by the U.S. government as the centralized distributor of refrigerated and frozen COVID-19 vaccines and the ancillary kits used to administer those vaccines.

McKesson Corporation Price and Consensus

 

McKesson Corporation Price and Consensus
McKesson Corporation Price and Consensus

McKesson Corporation price-consensus-chart | McKesson Corporation Quote

 

In July 2022, the U.S. government renewed the existing COVID-19 vaccine distribution contract. The company continues to reap benefits from its COVID-related programs in Canada and Europe.

These positive developments may get reflected in the fiscal third-quarter results.

Continued growth in the Medical-Surgical segment and Prescription Technology Solutions segment is likely to have benefited the company’s top line in the to-be-reported quarter. However, sales of COVID-19 test kits are likely to have declined during the third quarter. The Zacks Consensus Estimate for Medical-Surgical segment and Prescription Technology Solutions segment stood at $2.78 billion and $1.12 billion, respectively.

Earnings Beat Likely

Our proven model predicts an earnings beat for McKesson this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate ($6.36 per share) and the Zacks Consensus Estimate ($6.34 per share), is +0.21% for McKesson.

Zacks Rank: McKesson currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Other Stocks Worth a Look

Here are a few other medical stocks worth considering, as these also have the right combination of elements to beat on earnings this reporting cycle:

Cardinal Health CAH has an Earnings ESP of +5.75% and a Zacks Rank of 2. CAH has an estimated long-term growth rate of 11.7%.

Cardinal Health’s earnings surpassed estimates in two of the trailing four quarters and missed twice, with the average surprise being 3.04%.

Laboratory Corp. of America LH has an Earnings ESP of +2.67% and a Zacks Rank #2 at present. LH has an earnings yield of 7%, which compares favorably with the industry’s yield of 4.5%.

Laboratory Corp. of America ‘s earnings surpassed estimates in three of the trailing four quarters and missed once, with the average surprise being 6.06%.

Becton, Dickinson and Company BDX has an Earnings ESP of +0.17% and a Zacks Rank of 3 at present. BDX has an estimated long-term growth rate of 9.5%.

Becton, Dickinson and Company’s earnings surpassed estimates in all the trailing four quarters, with the average surprise being 10.39%.

Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Laboratory Corporation of America Holdings (LH) : Free Stock Analysis Report

Becton, Dickinson and Company (BDX) : Free Stock Analysis Report

Cardinal Health, Inc. (CAH) : Free Stock Analysis Report

McKesson Corporation (MCK) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research