Barclays Maintains an 'Overweight' on McKesson (MCK); Focus on Paragon Expanded Following Halt of Horizon ERM Development
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Price: $869.00 +1.44%
Rating Summary:
21 Buy, 9 Hold, 0 Sell
Rating Trend:
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Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
21 Buy, 9 Hold, 0 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Barclays maintains an 'Overweight' on McKesson (NYSE: MCK) price target of $104.00.
Barclays analyst says, "With confirmation McKesson will cease developing Horizon Enterprise Revenue Management (HERM) and focus efforts on Paragon, we note the following: We do not view this news as particularly surprising, given the company's previous writedown for the product, and suggest that this move is somewhat of an affirmation McKesson's strategy to better consolidate the number of its HCIT products and focus on better integration of platforms under its "Better Health 2020" initiative. Recall that MCK had already taken a $72-million impairment for HERM in F2Q11, reflecting continued challenges with HERM after several years in development."
"While management has not specified the exact impact of the additional charges expected in F12 associated with the writedown, MCK has confirmed it expects to come in at the low end of its guidance for F12 (MCK does not back out one-time items). Based on that, we expect some additional $0.15 in hit to MCK reported EPS (~$55 million) though we would expect to back this charge out of EPS results. While disappointing, in our view the news does reflect better focus on deploying R&D and a clearer IT strategy."
For an analyst ratings summary and ratings history on McKesson click here. For more ratings news on McKesson click here.
Shares of McKesson closed at $79.57 yesterday.
Barclays analyst says, "With confirmation McKesson will cease developing Horizon Enterprise Revenue Management (HERM) and focus efforts on Paragon, we note the following: We do not view this news as particularly surprising, given the company's previous writedown for the product, and suggest that this move is somewhat of an affirmation McKesson's strategy to better consolidate the number of its HCIT products and focus on better integration of platforms under its "Better Health 2020" initiative. Recall that MCK had already taken a $72-million impairment for HERM in F2Q11, reflecting continued challenges with HERM after several years in development."
"While management has not specified the exact impact of the additional charges expected in F12 associated with the writedown, MCK has confirmed it expects to come in at the low end of its guidance for F12 (MCK does not back out one-time items). Based on that, we expect some additional $0.15 in hit to MCK reported EPS (~$55 million) though we would expect to back this charge out of EPS results. While disappointing, in our view the news does reflect better focus on deploying R&D and a clearer IT strategy."
For an analyst ratings summary and ratings history on McKesson click here. For more ratings news on McKesson click here.
Shares of McKesson closed at $79.57 yesterday.
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