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On Wednesday, Morgan Stanley (NYSE:MS) maintained its Overweight rating on McKesson Corporation (NYSE:MCK) shares and increased the price target to $745 from the previous $642. The firm’s analysts highlighted the current period as a "golden era" for drug distribution, citing clear growth prospects, sustainable profit margins, and protection from regulatory changes. The stock currently trades at $673.69, near its 52-week high of $678.67, with InvestingPro data showing a remarkable 38% return over the past six months.
McKesson, a leader in pharmaceutical distribution, has been recognized for its robust performance in the U.S. Pharma sector, with revenue growth of 14.3% in the last twelve months to $344.6 billion. Morgan Stanley’s analysts believe this strength could propel the company’s earnings per share (EPS) to exceed its long-term targets, potentially by more than 14.3% when excluding contributions from MCK Ventures. They indicated, however, that the initial guidance might adopt a more cautious stance. InvestingPro analysis reveals the company maintains strong financial health with an overall score of 3.12/5, labeled as "GREAT."
The upgrade in the price target reflects confidence in McKesson’s ability to outperform in the market, backed by its solid positioning in drug distribution. The analysts underscored the company’s potential to deliver EPS growth above long-term expectations due to its operational focus and market conditions. According to InvestingPro, which offers comprehensive analysis through its Pro Research Reports covering 1,400+ top stocks, McKesson shows strong momentum with a price momentum score of 4.46/5, though its relative value score suggests careful consideration at current levels.
Morgan Stanley’s commentary provided a positive outlook for McKesson, suggesting that the company is well-equipped to navigate the industry landscape successfully. The analysts’ assessment points to McKesson’s strategic advantages, which could support its financial performance going forward.
The new price target of $745 represents Morgan Stanley’s valuation of McKesson’s prospects, taking into account the company’s current initiatives and the favorable industry environment. The Overweight rating implies that the firm expects McKesson stock to perform better than the average return of the stocks the firm covers over the next 12 to 18 months.
In other recent news, McKesson Corporation has reported third-quarter earnings and revenue that fell short of analyst expectations. The company posted adjusted earnings per share of $8.03, missing the consensus estimate of $8.27, with revenue reaching $95.29 billion, slightly below the forecasted $95.77 billion. Despite these results, McKesson raised its fiscal 2025 adjusted EPS guidance to a range of $32.55-$32.95, with the midpoint slightly above analyst projections. The U.S. Pharmaceutical (TADAWUL:2070) segment, McKesson’s largest division, experienced a 19% increase in revenue, driven by higher prescription volumes and growth in the oncology sector. The company announced plans to acquire a controlling interest in PRISM Vision Holdings for $850 million and the Florida Cancer Specialists & Research Institute for $2.5 billion, aligning with its strategy to enhance specialty services. S&P Global Ratings revised McKesson’s outlook to positive, affirming its ’BBB+’ rating, citing anticipated growth in the U.S. pharmaceutical and prescription technology segments. Citi analyst Daniel Grosslight raised McKesson’s stock price target to $685, maintaining a Buy rating, highlighting the strong performance of the pharmaceutical segment. McKesson’s updated guidance reflects its ability to navigate challenges and capitalize on strengths within its pharmaceutical distribution operations.
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