Why McKesson (MCK) Stock Is Surging Today
NEW YORK (TheStreet) -- McKesson (MCK) - Get Report stock is rising 3.92% to $172.39 in late-morning trading on Monday after the pharmaceutical distributor reached an agreement with Wal-Mart (WMT) to supply generic drugs.
The deal builds upon an existing long-term distribution agreement between the two companies and could reduce the cost of pharmaceutical care, according to a company statement.
"We are encouraged that McKesson was able to (1) retain the Walmart account, and (2) competitively bid for and win the generics business from Walmart," Leerink wrote in a note, Barron's reports.
Wal-Mart appears committed to expanding its health and wellness initiatives, and the pharmaceutical distribution portion of the wellness is a "key component to delivery value to customers," according to the firm's industry checks.
Incremental per-share earnings should range between 15 cents and 25 cents per share, with this volume beginning at the beginning of 2017, the firm added.
The agreement proves that McKesson is becoming increasingly competitive in the market, Leerink contended.
Separately, TheStreet Ratings team rates the stock as a "buy" with a rating score of B-.
McKesson's strengths such as its impressive record of earnings per share growth, compelling growth in net income, revenue growth, notable return on equity and good cash flow from operations outweigh the fact that the company shows low profit margins.
You can view the full analysis from the report here: MCK
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this article's author.
