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McKesson Corp MCK

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Morningstar’s Analysis

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Reaffirming Our Narrow Moat and Negative Moat Trend on the Big Three U.S. Pharma Wholesalers

Dylan Finley, CFA Equity Analyst

Analyst Note

| Dylan Finley, CFA |

After taking a refreshed look at the U.S. pharmaceutical wholesale industry, we are reaffirming our narrow moat and negative moat trend ratings, and we have revised our fair value estimates--with AmerisourceBergen at $142 per share (previously $135), McKesson at $210 per share (previously $198), and Cardinal Health at $55 per share (previously $60). These revisions reflect slightly higher revenue growth assumptions overall, a reworking of our gross and operating margin estimates, our updated long-term U.S. tax rate estimate of 26%, and the financial impact associated with a looming multi-billion dollar opioid settlement.

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Company Profile

Business Description

McKesson is a leading wholesaler of branded, generic, and specialty pharmaceutical products to pharmacies (retail chains, independent, and mail order), hospitals networks, and healthcare providers. Along with AmerisourceBergen and Cardinal Health, the three account for well over 90% of the U.S. pharmaceutical wholesale industry. Outside the U.S. market, McKesson engages in pharmaceutical wholesale and distribution in Europe and Canada. Additionally, the company supplies medical-surgical products and equipment to healthcare facilities and provides a variety of technology solutions for pharmacies.

6555 State Highway 161
Irving, TX, 75039
T +1 972 446-4800
Sector Healthcare
Industry Medical Distribution
Most Recent Earnings Jun 30, 2021
Fiscal Year End Mar 31, 2022
Stock Type Classic Growth
Employees 76,000