McKesson Reiterates FY15 Earnings Guidance - Analyst Blog

McKesson Corporation MCK reiterated its earnings guidance for fiscal 2015.

The company continues to expect earnings from continuing operations in the range of $10.40 – $10.80 in fiscal 2015.

The current Zacks Consensus Estimate of $10.63 is well within management's expected range.

We note McKesson has been actively pursuing deals and acquisitions to drive growth. After a failed bid, McKesson finally managed to secure the acquisition of Celesio earlier in 2014. McKesson launched a tender for the remaining outstanding common shares of Celesio in the fiscal fourth quarter and gained the mandatory 75% stake in Celesio. The company expects to gain operational control of Celesio in the first half of fiscal 2015.

McKesson has a history of successful acquisitions. We believe the Celesio acquisition is a step in the right direction and will allow McKesson to gain a strong foothold in Europe, thereby geographically expanding its core operations.

McKesson expects to realize annual synergies between $275 million and $325 million by the fourth year of obtaining operational control of Celesio.

Concurrent with the fiscal fourth quarter earnings call, McKesson had stated that revenue from Distribution Solutions should increase significantly in fiscal 2015 driven by the acquisition of Celesio.

However, revenues from Technology Solutions is estimated to decline modestly as growth in the connectivity and payer-facing businesses will be offset by an expected revenue decline in other areas.

McKesson currently carries a Zacks Rank #3 (Hold). We consider the guidance positive.

Some better-ranked stocks in the broader healthcare sector include Allergan AGN, Actelion (ALIOF), and Regeneron Pharmaceuticals, Inc REGN. All three carry a Zacks Rank #1 (Strong Buy).