) reiterated its earnings guidance for fiscal 2014 (ending Mar
31, 2014) at its analyst day on Jun 26, 2013.
McKesson continues to expect earnings (excluding special
items) from continuing operations in the range of $7.90-$8.20 per
share in fiscal 2014. The Zacks Consensus Estimate for fiscal
2014 currently stands at $8.07, within management's guidance.
McKesson expects pharmaceutical distribution business to
double in the next decade. On the fourth quarter fiscal 2013
earnings conference call, McKesson stated that it expects revenue
in its major segment, Distribution Solutions, to rebound due to
addition of PSS Medical, and increased demand from existing
We note that McKesson completed its acquisition of PSS World
Medical in Feb 2013. PSS World Medical was merged with McKesson's
Medical Surgical Distribution business.
We are impressed by the company's efforts to broaden its
portfolio through strategic acquisitions. The addition of PSS
Medical business should boost the portfolio. However, generic
launches are expected to be slower in 2013 compared to 2012.
Fiscal 2014 will be challenging due to the low level of generic
launches. Nevertheless, McKesson expects generics to grow by 2% -
4% in the next several years.
Moreover, growth in the Technology Solutions segment is also
expected to accelerate from fiscal 2013 levels primarily due to
the impact of acquisitions.
McKesson undertook a number of strategic actions in the fourth
quarter of fiscal 2013 to combat the challenges that it expects
to face in fiscal 2014.
McKesson decided to exit to minority investment in Nadro, a
privately held pharmaceutical distributor in Mexico, where the
company has a 49% stake. McKesson has also decided to realign its
structure in the Technology Solutions segment to focus on its
Meanwhile, the search for a new chief financial officer is on
following the resignation of Jeffrey C. Campbell from the
McKesson currently carries a Zacks Rank #3 (Hold). Right now,
) look well placed. While Salix Pharma and Santarus carry a Zacks
Rank #1 (Strong Buy), AmerisourceBergen carries a Zacks Rank #2
AMERISOURCEBRGN (ABC): Free Stock Analysis
MCKESSON CORP (MCK): Free Stock Analysis
SALIX PHARM-LTD (SLXP): Free Stock Analysis
SANTARUS INC (SNTS): Free Stock Analysis
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