Strength Seen in McKesson (MCK): Can Its 6.8% Jump Turn into More Strength?
Zacks Investment Research | May 10, 2021 03:33AM ET
McKesson (MCK) shares soared 6.8% in the last trading session to close at $197.61. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 2.3% loss over the past four weeks.
McKesson saw a strong price increase, courtesy of its encouraging fiscal fourth-quarter 2021 results. Reported earnings surpassed the Zacks Consensus Estimate by 0.6% and also delivered substantial year-over-year improvement. Market is also optimistic regarding the company’s fiscal 2022 earnings guidance (in the range of $18.85 to $19.45) suggesting 9.5-13% growth.
Price and Consensus
This prescription drug distributor is expected to post quarterly earnings of $4.06 per share in its upcoming report, which represents a year-over-year change of +46.6%. Revenues are expected to be $58.73 billion, up 5.5% from the year-ago quarter.
Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.
For McKesson, the consensus EPS estimate for the quarter has been revised 0.8% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on MCK going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank 3 (Hold). You can see Zacks Investment Research
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