McKesson (MCK) AI Stock Analysis

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McKesson

(NYSE:MCK)

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Outperform 74 (OpenAI - 5.2)

Rating:74Outperform

Price Target:

$1,073.00

▲(11.39% Upside)

Action:ReiteratedDate:02/06/26

The score is driven by strong cash-flow fundamentals and a very constructive earnings outlook with raised FY2026 guidance. These positives are tempered by a weaker balance-sheet profile and an extended technical condition (high RSI), while valuation is only modestly supportive due to a low dividend yield.

Positive Factors

Robust free cash flow generation

Consistently strong free cash flow provides durable capacity to fund debt service, buybacks, and strategic investments. That cash conversion underpins financial flexibility, supports the $2B repurchase plan, and enables continued capital allocation even if operating margins remain thin.

Scale and diversified specialty growth

Rapid oncology and steady RxTS growth reflect durable structural advantages: broad distribution scale, specialty capabilities, and value-add tech/services. Diversified segment momentum reduces reliance on commoditized wholesale flows and supports higher-margin, sticky customer relationships over the medium term.

Active capital return and portfolio focus

Committed buybacks plus portfolio actions (divestitures and targeted separation of medical-surgical) indicate disciplined capital allocation and strategic sharpening. Reducing non-core exposure and returning cash can raise ROIC and concentrate management on higher-growth, higher-margin businesses long term.

Negative Factors

High leverage and volatile equity history

Elevated leverage and prior negative equity constrain balance-sheet flexibility and increase refinancing, covenant, and rating risks. Even with strong FCF, a large debt load makes the company more sensitive to cyclical swings and limits optionality for large, non-accretive investments.

Structurally thin distribution margins

A low-margin wholesale model means small cost or pricing pressures materially affect earnings. The medical-surgical profit decline highlights exposure to volume cycles and reimbursement pressures, making operating leverage limited and earnings more vulnerable to adverse demand or cost shifts.

Strategic uncertainty in GLP-1 channels and volatility

Key growth from GLP-1 distribution faces structural ambiguity around channel shifts and launch dynamics. That uncertainty undermines revenue predictability and program economics, increasing execution risk for specialty distribution and prior-authorization businesses over the medium term.

McKesson (MCK) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$117.26B

Dividend Yield0.37%

Average Volume (3M)739.18K

Price to Earnings (P/E)27.5

Beta (1Y)0.28

Revenue Growth17.23%

EPS Growth66.17%

CountryUS

Employees44,000

SectorHealthcare

Sector Strength45

IndustryMedical - Distribution

Share Statistics

EPS (TTM)9.34

Shares Outstanding122,487,460

10 Day Avg. Volume721,761

30 Day Avg. Volume739,183

Financial Highlights & Ratios

PEG Ratio1.77

Price to Book (P/B)-41.34

Price to Sales (P/S)0.24

P/FCF Ratio16.41

Enterprise Value/Market Cap1.06

Enterprise Value/Revenue0.31

Enterprise Value/Gross Profit9.28

Enterprise Value/Ebitda19.26

Forecast

1Y Price Target

$990.10

Price Target Upside2.79% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering11

EPS Forecast (FY)38.96

Revenue Forecast (FY)$408.57B

McKesson Business Overview & Revenue Model

Company DescriptionMcKesson Corporation provides healthcare services in the United States and internationally. It operates through four segments: U.S. Pharmaceutical, International, Medical-Surgical Solutions, and Prescription Technology Solutions (RxTS). The U.S. Pharmaceutical segment distributes branded, generic, specialty, biosimilar, and over-the-counter pharmaceutical drugs and other healthcare-related products. This segment also provides practice management, technology, clinical support, and business solutions to community-based oncology and other specialty practices; and consulting, outsourcing, technological, and other services, as well as sells financial, operational, and clinical solutions to pharmacies. The International segment offers distribution and services to wholesale, institutional, and retail customers in 13 European countries and Canada. The Medical-Surgical Solutions segment provides medical-surgical supply distribution, logistics, and other services to healthcare providers. The RxTS segment serves biopharma and life sciences partners and patients to address medication challenges for patients throughout their journeys; connects pharmacies, providers, payers, and biopharma companies to deliver innovative access and adherence solutions; and provides third-party logistics and wholesale distribution support solutions. McKesson Corporation was founded in 1833 and is headquartered in Irving, Texas.

How the Company Makes MoneyMcKesson generates revenue primarily through the distribution of pharmaceuticals and medical supplies. The company's key revenue streams include the wholesale distribution of branded and generic pharmaceuticals to pharmacies, hospitals, and other healthcare providers, which constitutes a significant portion of its total revenue. Additionally, McKesson provides integrated healthcare management solutions, generating revenue from software services and consulting. The company benefits from long-term contracts with large healthcare systems and partnerships with pharmaceutical manufacturers, enhancing its pricing power and operational efficiency. Furthermore, McKesson's participation in specialty pharmacy services and value-based care initiatives diversifies its income sources and supports its overall growth strategy.

McKesson Key Performance Indicators (KPIs)

Any

Revenue by Segment

Revenue by Segment
Shows how revenue is distributed across various business segments, indicating which areas are growing or declining and where the company is focusing its efforts.

Chart InsightsMcKesson's U.S. Pharmaceutical segment is experiencing robust growth, with a notable 25% revenue increase, driven by higher prescription volumes and specialty product distribution. This aligns with the company's strategic focus on the U.S. market, as evidenced by their exit from European operations. The Prescription Technology Solutions segment also shows strong momentum, with 16% revenue growth fueled by demand for access and affordability solutions. Strategic acquisitions are expected to further boost operating profit, despite challenges like Rite Aid's bankruptcy. Overall, McKesson's raised guidance reflects confidence in sustained growth.

Data provided by:

The Fly

McKesson Earnings Call Summary

Earnings Call Date:Feb 04, 2026

(Q3-2026)

% Change Since: |

Next Earnings Date:May 13, 2026

Earnings Call Sentiment Positive

The call presents a broadly positive operational and financial picture: strong double-digit top-line and EPS growth, raised full-year guidance, robust segment performance (notably oncology, specialty distribution and RxTS), solid cash generation, active buybacks, and successful acquisition integrations. Challenges are relatively contained: medical-surgical profitability pressure, quarter-to-quarter variability driven by seasonality/launch timing, and some uncertainty around GLP-1 channel evolution and near-term technology investment costs. Overall, the positives (growth, margin expansion, cash flow, strategic progress) materially outweigh the noted headwinds.

Q3-2026 Updates

Positive Updates

Record Quarterly Revenue and Strong EPS

Consolidated revenues increased 11% year-over-year to $106.2 billion. Third quarter diluted EPS increased 16% to $9.34, driven by operational performance and acquisitions.

Raised Full-Year Guidance

Full-year adjusted EPS guidance raised to $38.80–$39.20 (17–19% YoY growth). Company also set revenue growth guidance of 12–16% and operating profit growth guidance of 13–17% for fiscal 2026.

Oncology & Multispecialty: Rapid Growth and Accretion from Acquisitions

Oncology and multispecialty revenues grew 37% year-over-year to $13.0 billion; operating profit rose 57% to $366 million. Acquisitions (Prism and Core Ventures) contributed ~13% to Q3 segment revenue growth and are expected to contribute ~30–34% to fiscal 2026 segment operating profit growth.

North American Pharmaceutical Distribution Momentum

North American Pharmaceutical revenues were $88.3 billion, up 9% YoY, supported by higher prescription volumes, specialty distribution strength, and health system volumes. Segment operating profit increased 6% to $872 million.

Substantial GLP-1 Distribution Growth

GLP-1 distribution revenues were $14.0 billion in the quarter, up $3.0 billion (26% YoY) with sequential growth of 7%.

Prescription Technology Solutions (RxTS) Performance

RxTS revenues increased 9% to $1.5 billion and operating profit rose 18% to $277 million, driven by demand for access, affordability, and prior authorization services and new program additions (50 new programs across 43 brands).

Profitability, Efficiency and Cash Generation

Gross profit increased 10% to $3.7 billion; operating profit rose 13% to $1.7 billion. Operating expense improvement of 138 basis points as a percentage of gross profit. Q3 free cash flow was $1.1 billion; trailing twelve months free cash flow was $9.6 billion. Ended quarter with $3.0 billion in cash and returned $781 million to shareholders (including $680 million in repurchases).

Balance Sheet Strength and Capital Return Plan

Company plans ~ $2.0 billion in share repurchases for fiscal 2026, expects free cash flow of $4.4–$4.8 billion, and maintains an investment-grade balance sheet. Return on invested capital improved by ~1,900 basis points since fiscal 2020, now exceeding 30%.

Progress on Portfolio Actions and Separation

Completed divestiture of Norway (final exit from Europe) and achieved transition service agreements for the medical-surgical separation. Tracking toward an IPO of the medical-surgical business by H2 calendar 2027 (subject to market/regulatory conditions).

Technology & Automation Wins

AI and automation initiatives improved productivity (each FTE supporting ~120 more patients in annual verification season), DSCSA AI chat tool prevented 75% of inquiries from escalating, and Canadian contact-center pilots approaching ~100% service accuracy.

Negative Updates

Medical-Surgical Segment Pressure

Medical-surgical revenues were $3.0 billion (up 1% YoY) but operating profit declined 10% to $265 million, attributed to lower physician office volumes and a milder illness season.

Quarterly and Program Variability

Management emphasized that results (especially in RxTS and GLP-1 distribution) can vary quarter-to-quarter due to utilization trends, launch timing, program lifecycle shifts, seasonal illness variability, and supply chain dynamics—introducing execution risk to quarters and potentially to FY27.

Uncertainty Around GLP-1 Channel Dynamics

While GLP-1 distribution grew strongly, management noted uncertainty about how oral GLP-1 launches and cash-pay channel shifts will evolve (net new users vs. share shifts), making future utilization and prior-authorization trends less predictable.

Incremental Technology Investment and Near-Term Costs

Planned incremental technology investments expected to add ~ $0.05 of cost in fiscal Q4 versus prior year; corporate expenses rose year-over-year and include ongoing technology infrastructure spending ($620–$650 million expected for year).

Guidance Range Variability and Below-the-Line Items

Some guidance ranges (e.g., North American pharmaceutical revenue/operating profit) remain wide and include line-item variances such as interest expense guidance ($215–$235 million) and noncontrolling interest ($230–$250 million), creating some forecast dispersion.

Company Guidance

Management raised and narrowed fiscal 2026 guidance to adjusted EPS of $38.80–$39.20 (up 17–19% y/y), revenue growth of 12–16%, and operating profit growth of 13–17%. Segment outlooks: North American Pharmaceutical revenue +10–14% and operating profit +8–12%; Oncology & Multispecialty revenue +29–33% and operating profit +51–55% (with Prism Vision and Core Ventures expected to contribute ~30–34% of the segment’s operating profit growth); Prescription Technology Solutions revenue +9–13% and operating profit +14–18%. Corporate expenses are guided to $620–$650M (including $15M YTD pretax gains), interest expense $215–$235M, income attributable to noncontrolling interest $230–$250M, and an effective tax rate of ~19%. Cash flow and capital priorities include free cash flow of ~$4.4–$4.8B for FY26, ~ $2B of planned share repurchases, and weighted average diluted shares of ~124M; management also noted an incremental Q4 technology investment cost of about $0.05 per share versus the prior year.

McKesson Financial Statement Overview

Summary

Strong operating profile and cash generation (income statement score 78; cash flow score 88 with robust, consistently positive free cash flow) are meaningfully offset by balance-sheet risk (balance sheet score 38) driven by high leverage and historically negative equity/volatility.

Income Statement

Positive

Top-line growth has been consistently positive across the annual periods and remains positive in TTM (Trailing-Twelve-Months), indicating resilient demand and scale. Profitability is steady but structurally thin (low gross and net margins typical for distribution), with margins below earlier highs (e.g., 2023 vs. more recent periods). Earnings recovered materially from the 2021 loss and have remained solid since, but the overall profile is still sensitive to small margin moves given the low spread business model.

Balance Sheet

Negative

Leverage is the key constraint: total debt remains sizable, and equity is negative in multiple annual periods (2021–2025 annual), which weakens balance-sheet flexibility and can amplify risk during downturns. While the latest TTM (Trailing-Twelve-Months) shows positive equity, the sharp swing versus recent annual figures suggests the capital structure is volatile. Overall assets have grown, but the equity position and debt load keep the balance sheet on the weaker end relative to the strong operating scale.

Cash Flow

Very Positive

Cash generation is a major strength: operating cash flow and free cash flow are robust, with a very strong step-up in TTM (Trailing-Twelve-Months) free cash flow and healthy conversion of earnings into free cash flow. Free cash flow has been positive in every period shown and generally tracks well versus net income, supporting debt service capacity and shareholder returns. The main watch item is year-to-year variability (including a decline in 2024), but the most recent trajectory is meaningfully improved.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	397.96B	359.05B	308.95B	276.71B	263.97B	238.23B
Gross Profit	13.43B	12.48B	12.20B	11.87B	12.65B	11.58B
EBITDA	6.47B	5.25B	4.67B	5.74B	3.11B	-3.60B
Net Income	4.34B	3.29B	3.00B	3.56B	1.11B	-4.54B
Balance Sheet
Total Assets	84.19B	75.14B	67.44B	62.32B	63.30B	65.02B
Cash, Cash Equivalents and Short-Term Investments	2.96B	5.69B	4.58B	4.68B	3.53B	6.28B
Total Debt	8.62B	7.39B	7.39B	7.29B	7.54B	9.40B
Total Liabilities	84.29B	76.83B	69.04B	63.81B	65.09B	63.57B
Stockholders Equity	-1.30B	-2.07B	-1.97B	-1.86B	-2.27B	-21.00M
Cash Flow
Free Cash Flow	10.10B	5.23B	3.63B	4.60B	3.90B	3.90B
Operating Cash Flow	10.48B	6.08B	4.31B	5.16B	4.43B	4.54B
Investing Cash Flow	-4.08B	-733.00M	-1.07B	-542.00M	-89.00M	-415.00M
Financing Cash Flow	-4.67B	-3.96B	-3.34B	-4.37B	-6.32B	-1.69B

McKesson Technical Analysis

Technical Analysis Sentiment

Positive

Last Price963.24

Price Trends

50DMA

859.15

Positive

100DMA

837.29

Positive

200DMA

772.28

Positive

Market Momentum

MACD

30.69

Negative

RSI

65.88

Neutral

STOCH

83.80

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MCK, the sentiment is Positive. The current price of 963.24 is above the 20-day moving average (MA) of 912.78, above the 50-day MA of 859.15, and above the 200-day MA of 772.28, indicating a bullish trend. The MACD of 30.69 indicates Negative momentum. The RSI at 65.88 is Neutral, neither overbought nor oversold. The STOCH value of 83.80 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MCK.

McKesson Risk Analysis

McKesson disclosed 38 risk factors in its most recent earnings report. McKesson reported the most risks in the "Production" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

McKesson Peers Comparison

Overall Rating

UnderperformOutperform

Sector (51)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MCK	74 Outperform	$117.26B	27.54	―	0.37%	17.23%	66.17%
CAH	73 Outperform	$53.17B	32.52	―	0.98%	4.37%	28.48%
PBH	73 Outperform	$3.26B	18.35	11.29%	―	-0.02%	-1.87%
COR	66 Neutral	$70.88B	43.83	152.25%	0.66%	9.31%	5.92%
HSIC	65 Neutral	$9.81B	25.05	11.39%	―	3.51%	29.65%
Sector *	51 Neutral	$7.86B	-0.30	-43.30%	2.27%	22.53%	-2.21%

* Healthcare Sector Average

Performance Comparison

MCK

McKesson

963.24

342.25

55.11%

COR

Cencora

363.03

114.16

45.87%

CAH

Cardinal Health

226.18

100.58

80.07%

HSIC

Henry Schein

81.91

9.37

12.92%

PBH

Prestige Consumer Healthcare

69.38

-16.74

-19.44%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Feb 06, 2026