McKesson Continues to Face Material Headwinds; Our Long-Term Thesis Remains
McKesson reported another tough quarter, as unfavorable pharmaceutical pricing trends pressured the firm’s profitability. Nevertheless, we believe the long-term fundamentals of pharmaceutical services remain solid and should buoy McKesson over the next several years. Accordingly, we are reiterating our $200 fair value estimate and wide moat rating for the drug distributor. Management also said that its expectations for the remainder of the year remain, which points to a steadying of its operatin...McKesson provides pharmaceuticals and medical supplies and services to its customers. The company's segments include: U.S. Pharmaceutical and Specialty Solutions, which provides distribution and logistics services for branded, generic, specialty, biosimilar and over-the-counter pharmaceutical drugs and other healthcare-related products to customers; European Pharmaceutical Solutions, which provides distribution and services to wholesale, institutional and retail customers in European countries where it owns, partners or franchises with retail pharmacies; and Medical-Surgical Solutions, which delivers medical-supply distribution, logistics, biomedical and other services to healthcare providers.
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