McKesson (MCK) to Report Q3 Earnings: What's in the Offing?
McKesson Corporation’s MCK third-quarter fiscal 2021 results are scheduled to release on Feb 2, before the opening bell.
The company delivered an earnings surprise of 24% in the last reported quarter. Further, it beat estimates in each of the trailing four quarters, the average surprise being 13.4%.
Q3 Estimates
The Zacks Consensus Estimate for McKesson’s fiscal third-quarter earnings per share is pegged at $4.13, suggesting growth of 8.4% from the prior-year quarter. The same for revenues stands at $61.88 billion, indicating an improvement of 4.6% from the year-ago reported figure.
Factors to Note
McKesson expects fiscal third-quarter results to reflect segmental strength.
The U.S. Pharmaceutical and Specialty Solutions segment might have acted as a key catalyst in the quarter to be reported. In fact, the consensus mark for this segment’s revenues is pegged at $49 billion, indicating an improvement of 4.4% from the prior-year quarter.
Notably, the segment may have benefited from branded pharmaceutical price increases 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. Nonetheless, the company’s broad spectrum of specialty biopharmaceutical providers and manufacturers are expected to have contributed to the fiscal third-quarter performance.
McKesson Corporation Price and EPS Surprise
McKesson Corporation price-eps-surprise | McKesson Corporation Quote
Growing demand for COVID-19 tests and personal protective equipment (PPE) in the Primary Care and Extended businesses is likely to have favored the company’s Medical-Surgical solutions segment.
In fact, the consensus mark for this segment’s revenues is pegged at $2.76 billion, indicating an improvement of 28.8% from the prior-year quarter.
Moreover, new brand support programs are likely to have driven revenues at the company’s Prescription Technology Solutions business in the fiscal third quarter.
On Nov 1, 2020, McKesson announced that it has completed the contribution of its German wholesale business to a joint venture with Walgreens Boots Alliance. While Walgreens holds a 70% controlling equity interest in the joint venture, McKesson holds the rest 30%.
This positive development may get reflected in the fiscal second-quarter results.
McKesson is likely to have witnessed lower volumes in the Canadian pharmaceutical distribution business in the to-be-reported quarter due to the exit of an unprofitable customer at the start of fiscal 2021.
What the Zacks Model Unveils
Per our proven model, the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.
Earnings ESP: McKesson has an Earnings ESP of -1.63%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter.
AmerisourceBergen Corporation ABC has an Earnings ESP of +2.58% and a Zacks Rank of 3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics Corporation HAE has an Earnings ESP of +4.80% and a Zacks Rank of 3.
Ecolab Inc. ECL has an Earnings ESP of +0.08% and a Zacks Rank of 3.
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