Investment firm Jefferies announced a reduction in its price target for McKesson Corporation (NYSE:MCK) to $74 per share, down from the previous target of $79, although it continues to rate the stock as a Buy. McKesson's shares recently traded at approximately $81.05 and appear undervalued relative to InvestingPro's Fair Value metrics, holding a price-to-earnings (P/E) ratio of 25.45.
The revision in price target follows McKesson's failure to meet expectations in its fourth-quarter earnings report, coupled with a more cautious outlook for 2026. Jefferies attributes these setbacks primarily to persistent inflation-driven pressures on operational costs, reflected in a notably weak gross profit margin of 3.44%. Despite these headwinds, the firm acknowledged McKesson's resilience, pointing to sustained volume growth and a growing innovation pipeline as positive indicators that support the possibility of incremental margin improvement moving forward.
Additionally, Jefferies emphasized the beneficial impact of McKesson's acquisition of McCormick de México, highlighting it as a valuable asset that could aid the company in navigating a continuing environment characterized by volatile costs and shifting trade dynamics. The research team expressed optimism about McKesson's future, citing favorable trends within its categories and strategic initiatives that may enhance the company's prospects for recovery in upcoming periods.
In a broader analyst update, McKesson reported fiscal second-quarter 2026 earnings that exceeded expectations, with an earnings per share (EPS) of $9.86 surpassing the forecasted $9.04. However, revenues slightly fell short, coming in at $103 billion compared to an anticipated $104.15 billion. Responding to these results, analysts at Leerink Partners raised their price target for McKesson to $965 from $850, commending what they described as an "incredibly strong distributor quarter," noting all primary business segments outperformed forecasts.
Similarly, Evercore ISI elevated its target price to $1,000, attributing the increase to the robust performance of McKesson's North American Pharmaceutical segment alongside projected improvements in operating income. TD Cowen maintained its price target at $1,000, emphasizing confidence in McKesson's capacity for substantial growth, supported by favorable demographic trends and advancements in pharmaceutical innovation. Collectively, these assessments reflect a positive analyst sentiment regarding McKesson's financial health and strategic positioning.