McKesson Corporation MCK witnessed strong momentum in the year-to-date period. Shares of the company rallied 34.1% compared with 2.9% growth of the industryin the same period. The S&P 500 Composite has risen 24.5% during the same time frame.
With healthy fundamentals and strong growth opportunities, this Zacks Rank #3 (Hold) company appears to be a solid wealth creator for its investors at the moment.
Headquartered in San Francisco, CA, McKesson is a healthcare services and information technology company with two operating segments — Distribution Solutions and Technology Solutions. The first segment distributes branded and generic pharmaceutical drugs, along with other healthcare-related products, on a global basis. The second segment offers enterprise-wide clinical, patient care, financial, supply chain and strategic management software solutions.
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Factors Favoring MCK’s Growth
The rally in MCK’s shares can be attributed to the strength of its robust U.S. Pharmaceutical business. This optimism, led by a solid second-quarter performance and increasing demand for healthcare, is expected to contribute further. However, weak pricing trends are concerning.
Investors seem optimistic regarding the updated earnings guidance. On its second-quarter 2025earnings call McKesson raised its adjusted earnings per share (EPS) guidance for fiscal 2025. It now expects adjusted EPS in the range of $32.40-$33.00 (previously expected $31.75-$32.55), which represents growth of 18-20% from the prior-year level. Revenues are expected to grow 15%-17% from the prior-year figure.
The company recorded a significant uptick in its overall top line during the second quarter. This growth was primarily driven by the U.S. Pharmaceutical segment and continued momentum in the Pharmaceutical segment, especially for specialty products and GLP-1 medications. MCK also recorded increased prescription volumes during the quarter.
International segment revenues also witnessed growth year over year. This was due to higher pharmaceutical distribution volumes in the Canadian business. Revenues in the Medical-Surgical Solutions segment were primarily driven by higher volumes of specialty pharmaceuticals, including vaccines in the primary care channel.
Investors also seem to be interested in the company’s recent strategic collaboration. This month, Ontada, a McKesson business, announced a strategic collaboration with Datavant, a health data platform, to include Ontada’s data in their health ecosystem. This collaboration aims to help life science companies quickly access Ontada’s real-world data.
Also, this month, InspiroGene, another MCK business, was selected by Vertex Pharmaceuticals Incorporated to expand commercial distribution options for CASGEVY. The availability of the FDA-approved drug is expected to significantly solidify McKesson’s foothold in the sickle cell disease treatment space.
Factor That May Offset the Gains for MCK
McKesson distributes generic pharmaceuticals, which are subject to price fluctuation. The Distribution Solutions segment had experienced weaker generic pharmaceutical pricing trends, which continue to persist. Continued volatility, unfavorable pricing trends, reimbursement of generic drugs and significant fluctuations in the nature, frequency and magnitude of generic pharmaceutical launches could affect McKesson.
Stocks to Consider
Some better-ranked stocks from the medical industry are Masimo MASI, AngioDynamics ANGO and Globus Medical GMED.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 10.4% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Masimo’s shares have risen 37.2% year to date compared with the industry’s 6.7% growth.
AngioDynamics, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 38.2% for 2025. ANGO’s earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 31.71%.
AngioDynamics’ shares have lost 8.9% year to date against the industry’s 6.7% growth.
Globus Medical, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 12.7%. GMED’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.1%. Its shares have risen 56.5% year to date compared with the industry’s 6.7% growth.
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