McKesson Misses in 3Q - Analyst Blog
01 2월 2013 - 9:30PM
Zacks
McKesson Corporation’s (MCK) third quarter
fiscal 2013 (ended Dec 31, 2012) adjusted earnings of $1.41 per
share missed the Zacks Consensus Estimate of $1.63 per
share.
However, reported earnings came in at $1.24 per
share, up from $1.20 per share in the year-ago quarter, benefiting
from lower share count.
Revenues climbed 1% to $31.2 billion as
brand-to-generics continue to slow revenue growth. Revenues
were marginally short of the Zacks Consensus Estimate of $31.6
billion.
Quarter in Detail
McKesson operates through two
segments: Distribution Solutions and Technology
Solutions.
Revenues at the Distribution Solutions segment
increased 1% to $30.4 billion in the reported quarter, driven by
growth in the US pharmaceutical direct distribution and services
business. Strong sales in the company’s Medical-Surgical
distribution business also benefited segmental revenues in the
third quarter of fiscal 2013. Revenues from the US pharmaceutical
distribution business came in at $26.8 billion, flat year over
year. Revenues from Canada grew 6% to $2.6 billion. However,
the results in the Distribution Solutions segment were impacted by
a $40 million pretax charge pertaining to a legal dispute in the
Canadian segment. Revenues from Medical-Surgical distribution and
services grew 15% to $874 million. The increase was attributable to
market growth, new customers, acquisitions and one additional sales
day.
Revenues at the Technology Solutions segment
were flat year over year at $826 million. Segmental results were
affected by $16 million due to the revenue deferral in the
segment’s international business.
Margins
Operating expenses climbed 10% in the reported
quarter to $1.1 billion. Meanwhile, the company’s board of
directors cleared an additional $500 million share buyback program.
We believe that the buyback program highlights the company’s
commitment to create value for shareholders. McKesson also expects
to close its acquisition of PSS World Medical (PSSI)
late in the fiscal fourth quarter. We note that McKesson inked a
deal to buy PSS World Medical, Inc. for $29.00 per share in cash in
2012.
Fiscal 2013 Outlook
The company lowered its adjusted earnings
outlook for fiscal 2013 due to the legal dispute charge in the
Canadian business and revenue deferral in the international
technology business. McKesson expects earnings (excluding special
items) in the range of $7.10-$7.30 per share (previous projection:
$7.15 - $7.35 share). The Zacks Consensus Estimate for fiscal 2013
stands at $7.29.
McKesson currently carries a Zacks Rank #3
(Hold). Nevertheless, stocks like AmerisourceBergen (ABC)
and CVS Caremark
Corporation (CVS)
operate in the same sector as McKesson and currently look
attractive with a Zacks Rank #2 (Buy).
AMERISOURCEBRGN (ABC): Free Stock Analysis Report
CVS CAREMARK CP (CVS): Free Stock Analysis Report
MCKESSON CORP (MCK): Free Stock Analysis Report
PSS WORLD MED (PSSI): Free Stock Analysis Report
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PSS World Medical (NASDAQ:PSSI)
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