Here's Why You Should Retain McKesson Stock in Your Portfolio for Now

McKesson’s MCK prospects are being driven by robust growth in specialty distribution, oncology services and biopharma solutions. Earnings are also improving on the back of ongoing operational efficiency and capital discipline despite persistent margin pressures and volatility across certain segments.

Shares of this Zacks Rank #3 (Hold) company have gained 6.5% year to date compared with the industry's 5.9% growth and the S&P 500’s 11.4% rise.

MCK is one of the leading pharmaceutical distributors in North America, with a market capitalization of $100.14 billion. It forecasts 11.4% earnings growth over the next five fiscal years. The company’s earnings surpassed estimates in each of the trailing four quarters, the average beat being 4.29%.

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Factors Favoring MCK Stock

Strong North American Pharmaceutical Momentum: McKesson’s North American Pharmaceutical segment delivered strong momentum in the first quarter of fiscal 2027, with revenues increasing 5% and operating profit rising 19% to $894 million. Growth was driven by higher prescription transaction volumes, including specialty products, as well as the timing of new product launches and strong distribution to health systems and strategic accounts.

Lower branded pharmaceutical pricing following WAC decreases had little impact on operating profit. Management said the business continues to benefit from stable utilization trends, specialty growth and its generic sourcing program. McKesson expects continued GLP-1 growth, with distribution revenues from these medications reaching $15 billion in the quarter, up 24% year over year. Sustained prescription volumes and specialty demand could support earnings momentum despite pricing pressure.

Oncology and Multispecialty Platform Gains Traction: McKesson’s Oncology and Multispecialty segment continues to be one of its strongest growth engines. Revenues increased 33% to $14.2 billion, while operating profit rose 41%. Even excluding Core Ventures, revenues grew about 24% and operating profit about 15%, indicating growth beyond acquisitions. Higher specialty distribution volumes, growth in existing provider solutions and new business wins are the main drivers.

The U.S. Oncology Network has expanded to approximately 3,400 providers, while McKesson supports more than 14,000 providers across community-based specialties. Management expects further growth from physician recruitment, geographic expansion, greater throughput across existing practices and AI-enabled technologies that could help providers see more patients. This creates multiple avenues for continued growth beyond acquisitions.

Technology Solutions and AI Strengthen the Growth Profile: McKesson’s Prescription Technology Solutions business continued to demonstrate strong operating leverage, with revenues increasing 9% and operating profit rising 13% to $303 million. Growth was supported by higher prescription volumes in third-party logistics and access solutions, particularly prior authorization services. McKesson also began supporting the CMS Medicare GLP-1 Bridge program, with 95% of prior authorization requests receiving a determination within 30 minutes. Management expects fiscal 2027 revenue growth of 2.5% to 6.5% and operating profit growth of 11% to 15%, reinforcing the earnings contribution from access solutions.

Demand is broadening across GLP-1 medications and other therapeutic categories. McKesson’s technology platform is helping manufacturers, providers, pharmacies and payers navigate complex access and affordability requirements. Management highlighted that AI-enabled development allowed the company to build and deploy an external data connection in a single business day versus several weeks or months historically. Greater automation and productivity could strengthen the value of these solutions while supporting long-term growth.

Factors That May Offset the Gains for MCK

Branded Drug Pricing Pressure Weighs on Revenue Growth: Lower branded pharmaceutical pricing remains a top-line headwind for McKesson. Management noted that WAC decreases following January 2026 pricing changes partially offset prescription-volume growth in North American Pharmaceutical. While these declines had little impact on operating profit because more than 95% of branded drugs are under fee-for-service arrangements, they still reduce reported revenue growth.

The company expects North American Pharmaceutical revenues to grow in fiscal 2027, meaning pricing pressure could continue to limit the pace of top-line expansion even if underlying prescription demand remains healthy.

Timing-Related Benefits Could Moderate Future Performance: Some of the first-quarter strength may not be fully repeatable. Management acknowledged that McKesson benefited earlier than expected from favorable developments in the generic business, which could come at the expense of later quarters. New product launch timing also contributed to first-quarter operating profit growth.

As a result, while management remains confident in the underlying fundamentals, quarterly performance may become less consistent as product launches, generic conversions and utilization trends shift throughout the year. This could create greater variability in earnings growth even if the broader business remains healthy.

Policy Changes Create Longer-Term Uncertainty: McKesson continues to monitor changes in the healthcare policy environment, including potential reforms to the 340B program and the Inflation Reduction Act’s Part D provisions. Management emphasized that the 340B proposal remains preliminary and that it is too early to determine its financial impact.

The IRA Part D changes are not expected to take effect until January 2028, but uncertainties remain around maximum fair prices, reimbursement changes and potential biosimilar competition. Although McKesson believes its scale, technology and provider relationships position it to navigate these changes, evolving drug-pricing policies could alter industry economics and create uncertainty around future growth.

Estimate Trends for MCK

McKesson is witnessing a positive estimate revision trend for fiscal 2027. In the past 30 days, the Zacks Consensus Estimate for its earnings per share has improved 37 cents to $44.65.

The Zacks Consensus Estimate for the company’s second-quarter fiscal 2027 revenues and earnings per share is pegged at $110.14 billion and $10.57, respectively. The estimate for revenues indicates a 6.8% improvement from the year-ago quarter’s reported number, while that for earnings implies a 7.2% gain.

McKesson Corporation Price

McKesson Corporation price | McKesson Corporation Quote

Stocks to Consider

Some better-ranked stocks from the broader medical space are Veracyte VCYT, Globus Medical GMED and West Pharmaceutical WST.

Veracyte, currently flaunting a Zacks Rank #1 (Strong Buy), reported a second-quarter 2026 adjusted earnings per share (EPS) of 54 cents, which surpassed the Zacks Consensus Estimate by 25.6%. Revenues of $150.3 million beat the Zacks Consensus Estimate by 4.1%. You can see the complete list of today’s Zacks #1 Rank stocks here.

VCYT has an estimated earnings growth rate of 8.4% for 2026. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 41.8%.

Globus Medical, currently carrying a Zacks Rank #2 (Buy), reported a second-quarter 2026 adjusted EPS of $1.34, which surpassed the Zacks Consensus Estimate by 19.6%. Revenues of $789.6 million beat the Zacks Consensus Estimate by 0.4%.

GMED has an estimated long-term earnings growth rate of 12.4%. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 27.9%.

West Pharmaceutical, carrying a Zacks Rank #2 at present, reported second-quarter 2026 adjusted EPS of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%.

WST has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.4%.

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This article originally published on Zacks Investment Research (zacks.com).

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