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McKesson Shares Move Higher After Strong FY22 Guidance, Goldman Sachs Price Target Hike

05/07/2021 15:46
  • McKesson Corporation (NYSE: MCKreported fourth-quarter FY21 EPS of $5.05, which beat the analyst consensus estimate of $5.04 versus $4.27 a year ago.
  • Sales increased 1% Y/Y to $59.14 billion, which missed the analyst consensus estimate of $61.09 billion.
  • Revenue growth of 1% Y/Y was primarily due to market growth and higher volumes from retail national account customers in the U.S. Pharmaceutical segment.
  • U.S. Pharmaceutical Segment revenues were $47.0 billion, an increase of 3% Y/Y, driven by market growth and higher volumes from retail national account customers, partially offset by the prior year’s acceleration in demand caused by the onset of the COVID-19 pandemic and branded to generic conversions.
  • Prescription Technology Solutions Segment sales increased 7% to $789 million, led by higher volumes of technology and service offerings to support biopharma customers.
  • Medical-Surgical Solutions sales improved 23% to $2.7 billion, driven by demand for COVID-19 tests.
  • Adjusted gross profit was approximately flat to the prior year as inventory charges in the Medical-Surgical segment and the previously mentioned last year demand increase, driven by COVID, largely offset the contribution of COVID-19 vaccine distribution and kitting programs and the distribution of COVID-19 tests.
  • Adjusted operating profit increased 12% to $1.16 billion.
  • Despite the pandemic-driven uncertainty on FY22 financials, “we do expect a return to pre-COVID levels of prescription volumes and patient engagement levels in the second half of fiscal 2022,” CEO Brian Tyler said on the earnings call.
  • McKesson guides FY22 adjusted EPS of $18.85 – 19.45, indicating 9.5% - 13% Y/Y growth. The consensus EPS stands at $18.85 per share.
  • Guidance assumes $0.50 to $0.70 adjusted EPS related to the U.S. government’s COVID-19 vaccine distribution and kitting programs.
  • McKesson sees FY22 revenue growth of 3% to 6%.
  • Goldman Sachs maintains McKesson with a Buy and raises the price target from $231 to $257.
  • Price Action: MCK shares are up 6.6% at $197.34 during market trading hours on the last check Friday.