We’re at the height of earnings season, and things can change pretty fast. Like many companies, today’s recommendation just reported earnings yesterday. Earnings came in well above estimates, despite weak revenue, apparently satisfying the fickle desires of the Street. But the buy recommendation below, from Dow Theory ForecastsEditor Richard J. Moroney, is based on the company’s longer-term outlook, which he thinks looks good.
“The largest U.S. pharmaceuticals distributor, McKesson Corp. (MCK, $92) should see improved profitability as more blockbuster drugs lose patent protection and face generic competition. Analysts project 4% sales growth for the June quarter, with earnings per share up 17% to $1.48. McKesson was scheduled to post results July 26, the day after the Forecasts went to press.
“Rising profit estimates have boosted McKesson shares, which set an all-time high in July. The stock outperformed the S&P 500 Index by 5% in the last three months and 12% in the past year. Yet McKesson remains reasonably valued at 13 times estimated 2012 earnings, 8% below the industry median. Scoring above 90 for both sector-specific ranks, McKesson is a Buy and a Long-Term Buy.”
- Richard J. Moroney, Dow Theory Forecasts, July 26, 2012