Introduction

Is McKesson Corporation (NYSE:MCK) investable again now that the fallout over its missed Q2 2017 numbers has been absorbed and the negative sentiment priced into the stock. Although this was the fourth consecutive quarter in which McKesson has missed revenue targets, McKesson has sold off by ~$100 per share or 42% from its all-time highs in May of 2015 falling from $240 to roughly $140 as of recent trading (Figure 1). In February I wrote a piece on McKesson stating that I felt McKesson presented a buying opportunity when the stock sank to a 52-week low of $148 per share. As that call began to come to fruition, I wrote a series of follow-up articles voicing caution as the share price appreciated. As shares appreciated ~30% by reaching the ~$200 level in the summer, I was hesitant due to pressures regarding the pharmaceutical supply chain and earnings from other pharmaceutical wholesalers such as Cardinal Health. At that time, I had relinquished my position in McKesson due to the run-up in share price and the growing concerns of the business model in combination with social and political pressures. As these pressures mounted the stock witnessed another double-digit fall from the ~$200 level to ~$125 during the back half of 2016. Now that the stock has stabilized at the $140 level, boasts a reasonable P/E ratio, more certainty surrounding the political backdrop and acquisitions coming full circle, McKesson may be an investable stock once again. Continue reading "Is McKesson Investable Again?" →