McKesson: Expanding Biosimilar and Oncology Platform Drives Incremental Upside and Supports Buy Rating

Analyst Allen Lutz of Bank of America Securities maintained a Buy rating on McKesson, retaining the price target of $950.00.

Allen Lutz has given his Buy rating due to a combination of factors tied to McKesson’s expanding role in biosimilars and oncology. He highlights that McKesson’s Northstar Rx unit has begun offering a biosimilar version of Neulasta through a partnership with Fresenius Kabi, marking a strategic shift from mainly mature generics to higher-value products. Lutz notes that this move mirrors how major pharmacy benefit managers successfully launched and commercialized their own biosimilar lines, which helped stabilize and enhance their profitability profiles. He also emphasizes that McKesson’s extensive US Oncology Network, covering roughly 12% of US oncologists, provides a ready-made channel to direct volume toward its private-label biosimilars, magnifying the strategic benefit of this initiative.
Although the immediate financial upside from pegfilgrastim specifically appears limited given current depressed pricing, Lutz views it as a proof-of-concept for a broader biosimilar strategy. He points out that biosimilars can generate EBIT margins far above McKesson’s current consolidated levels, suggesting meaningful earnings leverage if the company broadens its biosimilar offering in oncology and ophthalmology. The optionality to scale Northstar Rx’s biosimilar portfolio, combined with the enhanced value of McKesson’s oncology platform as it acquires more providers, underpins his view that this development is an incremental upside driver rather than fully reflected in the current share price. On this basis, Lutz reiterates a Buy rating with a price objective above the prevailing market price, indicating confidence in further upside potential.

In another report released on January 14, Evercore ISI also maintained a Buy rating on the stock with a $1,000.00 price target.