Leerink Partners Downgrades McKesson (MCK) to Market Perform
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Leerink Partners downgraded McKesson (NYSE: MCK) from Outperform to Market Perform with a price target of $160.00.
Analyst David Larsen commented, "MCK reported F2Q:17 adjusted EPS of $2.94 (-11% y/y) which was well below Leerink/Consensus of $3.10/$3.04. Management also reduced F2017 EPS guidance by $1.08 at the midpoint. We are downgrading the stock to Market Perform due to deteriorating fundamentals, including: (1) a significant slowdown in brand inflation, (2) far less generic inflation, (3) a slowdown in the value of generic launches, (4) a more competitive pricing environment, (5) a business model where manufacturers are demanding more economics, (6) company specific headwinds such as RAD, and (7) a lack of transparency on earnings. Given all of these challenges we believe the stock deserves to trade at a "low-teens" multiple at best, and we believe the days of hyper-inflation beats and raises are over. We downgrade MCK to MP."
Shares of McKesson closed at $160.50 yesterday.
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