MCK Stock Gains 4% in 3 Weeks: Should You Buy, Hold or Sell?

Core Insights - McKesson (MCK) has started 2025 positively, with a 4% stock increase in January, driven by optimism regarding its performance and strategic focus on oncology and biopharma services [1][9] - The company reported strong second-quarter fiscal 2025 results, with U.S. Pharmaceutical segment revenues soaring 23% year over year to $85.7 billion, largely due to the growth of GLP-1 medications [10] - McKesson's strategic initiatives, including investments in technology and divestitures, are expected to enhance operational efficiency and focus on high-margin areas [2][17] Financial Performance - The U.S. Pharmaceutical segment's adjusted operating profit increased 11$902 million, supported by rising prescription volumes and the expansion of oncology services [10] - The International segment reported revenues of $3.7 billion, up 7$2.9 billion, with increased specialty pharmaceutical volumes partially offsetting challenges [12] - Prescription Technology Solutions (RxTS) revenues grew 11% to $1.3 billion, with automated prior authorizations saving patients over$2 billion in the second quarter [13] Strategic Focus - McKesson's focus on oncology and biopharma services is a major growth driver, with the U.S. Oncology Network expanding to over 3,300 providers [18] - The company is leveraging its scale and operational efficiency to enhance medication access and affordability through RxTS [17] - Strategic divestitures, including the sale of Rexall and Well.ca, are aimed at streamlining operations and reallocating resources to high-margin segments [2][18] Market Position - McKesson's stock is trading at a forward P/E of 16.5X, lower than the Medical Dental Supplies industry's 17.53X, indicating a favorable valuation [17] - The Medical-Dental Supplies industry has outperformed the broader medical sector and the S&P 500 Index, suggesting rising growth potential [4] Challenges - McKesson faces regulatory uncertainties, inflationary pressures, and potential supply-chain disruptions, which could impact margins and market share [3] - The Medical-Surgical Solutions segment reported a 4% decline in adjusted operating profit due to reduced primary care demand as market conditions normalized post-COVID-19 [21] - Rising operational costs in the U.S. Pharmaceutical segment have partially offset gains from other areas, impacting overall performance [22][23]