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Concerns About Undervalued McKesson Are Overblown

We think the firm is a powerful player within the pharmaceutical market today and is well-positioned for the long term.

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Vishnu Lekraj: Today, we are highlighting McKesson. It's one of the most powerful players on the global pharmaceutical supply chain. The company specializes in bringing in brain drugs from overseas and domestically to the end consumer retail pharmacies. It can do this at a more efficient pace and a more cost-effective level than many of its clients can on their own.

The company has a wide economic moat and has come under pressure here recently because of the drug pricing issues and headlines that have put the onus on middlemen who distribute drugs in the U.S. However, we believe many of these concerns and many of these issues are overblown, and McKesson's stellar position as one of the most powerful players within the pharmaceutical market today positions it well for long term. Combining this with its undervalued stock makes it one of the best ideas here at Morningstar.

Vishnu Lekraj does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.