On Friday, Baird increased its price target for McKesson Corporation (NYSE:MCK) to $603 from the previous $584, while maintaining an Outperform rating for the healthcare services and information technology company's stock. The adjustment comes as the analyst anticipates McKesson to provide formal financial guidance for fiscal year 2025.
The analyst expects McKesson to continue its robust performance, particularly in its U.S. Pharmaceutical and Provider Technology Solutions (PTS) segments, which are predicted to be the main contributors to profit. Despite a wide implied earnings per share (EPS) range for the fourth quarter of fiscal year 2024, both Baird and other market observers are leaning towards the higher end of estimates due to the company's consistent strength and history of surpassing expectations.
McKesson is anticipated to potentially exceed its initial long-range plan (LRP)-like comments for the fiscal year 2025 U.S. Pharmaceutical segment guidance. This suggests that the upcoming guidance could reveal a more optimistic outlook than what was initially indicated by the company.
The analyst also noted that the upcoming EPS report might face optical challenges due to the reversal of a tax benefit that McKesson recognized in the third quarter. However, this is a known factor that has already been taken into account in financial models.
Despite this, the overall sentiment towards McKesson's financial health remains positive, as reflected in the upgraded price target.
InvestingPro Insights
McKesson Corporation's (NYSE:MCK) financial health and stock performance have caught the attention of investors and analysts alike. With a robust market capitalization of $70.28 billion and a P/E ratio of 24.11, the company stands out in the Healthcare Providers & Services industry. Its revenue growth over the last twelve months has been noteworthy at 10.08%, indicating a solid operational performance.
InvestingPro Tips highlight that McKesson has been committed to returning value to shareholders, as evidenced by a 16-year streak of dividend increases and a history of maintaining dividend payments for 31 consecutive years. The company's management has also been actively repurchasing shares, showing confidence in the company's value and future prospects. Moreover, McKesson's stock has been trading near its 52-week high, showcasing the positive momentum it has been experiencing.
For those looking to delve deeper into McKesson's financials and stock performance, there are additional InvestingPro Tips available, which can be accessed through the InvestingPro platform. Readers can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 13 more tips to explore, investors can gain a comprehensive understanding of McKesson's position in the market.
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