Introduction

McKesson Corporation (NYSE:MCK) missed Q3 2017 numbers and this marks the fifth consecutive quarter in which McKesson has missed its revenue targets. The stock sold off shapely as a result of its recent revenue miss, sliding 8.3% or $12.55 per share. McKesson has paid dearly for this string of revenue misses, shedding over $102 per share or 42.5% from its all-time highs in May of 2015 falling from $240 to roughly $138 as of recent trading (Figure 1). There’s been a tremendous amount of pressure regarding the pharmaceutical supply chain in terms of pricing competition and potential erosion of the pharmaceutical wholesaler model. As if this wasn’t enough, social and political pressures over drug pricing have exacerbated these issues to the point of fierce pricing competition and the slowing of drug price increases (negatively impacting McKesson’s ability to take larger dollar amount cuts from the volume of business). As the negative sentiment is priced into the stock and acquisitions starting to bear fruit, will this finally be the turning point? Continue reading "McKesson's Misses For 5th Consecutive Quarter - Buying Opportunity?" →

Introduction

Is McKesson Corporation (NYSE:MCK) investable again now that the fallout over its missed Q2 2017 numbers has been absorbed and the negative sentiment priced into the stock. Although this was the fourth consecutive quarter in which McKesson has missed revenue targets, McKesson has sold off by ~$100 per share or 42% from its all-time highs in May of 2015 falling from $240 to roughly $140 as of recent trading (Figure 1). In February I wrote a piece on McKesson stating that I felt McKesson presented a buying opportunity when the stock sank to a 52-week low of $148 per share. As that call began to come to fruition, I wrote a series of follow-up articles voicing caution as the share price appreciated. As shares appreciated ~30% by reaching the ~$200 level in the summer, I was hesitant due to pressures regarding the pharmaceutical supply chain and earnings from other pharmaceutical wholesalers such as Cardinal Health. At that time, I had relinquished my position in McKesson due to the run-up in share price and the growing concerns of the business model in combination with social and political pressures. As these pressures mounted the stock witnessed another double-digit fall from the ~$200 level to ~$125 during the back half of 2016. Now that the stock has stabilized at the $140 level, boasts a reasonable P/E ratio, more certainty surrounding the political backdrop and acquisitions coming full circle, McKesson may be an investable stock once again. Continue reading "Is McKesson Investable Again?" →

Overview

McKesson Corporation (NYSE:MCK) recently reported Q2 2017 numbers that missed analysts’ expectations on both EPS and revenue, missing by $0.11 per share and $1.25 billion, respectively. This was the fourth consecutive quarter in which McKesson has missed revenue targets. As a result of the most recent miss, shares of McKesson sank by ~$40 per share or 23% beginning in after-hours trading and through the next trading day (Figure 1). In February I wrote a piece on McKesson stating that I felt McKesson presented a buying opportunity when the stock sank to a 52-week low of $148 per share. As that call began to come to fruition, I wrote a series of follow-up articles voicing caution as the share price appreciated. On March 21st I framed my thesis as being well intact as the shares appreciated to the mid $150s. On May 29th I stated that concerns remained despite the solid Q4 2016 quarterly earnings as shares appreciated to the low $180s. On July 20th I stated that shares had appreciated 34% by reaching the ~$200 level and at that point, I was hesitant due to pressures regarding the pharmaceutical supply chain and earnings from other pharmaceutical wholesalers such as Cardinal Health. At the writing of the July 20th article, I had relinquished my position in McKesson due to the run-up in share price and the growing concerns of the business model in combination with social and political pressures.

Figure 1 – McKesson’s free fall after missing Q2 2017 earnings and lowering guidance

Continue reading "McKesson Craters - Misses Q2 2017 Estimates and Lowers Guidance" →