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Analysts Weigh in on Two Falling Healthcare Stocks: McKesson Corporation (MCK) and Cempra Inc (CEMP)


McKesson Corporation

McKesson Corporation (NYSE:MCK) shares are falling nearly 22% today after the company reported disappointing results for the fiscal second-quarter and issued lackluster guidance. MCK posted EPS of $2.94, below the Street’s $3.04, and lowered its F17 guidance range by $1.10 to $12.35-$12.85, which will now likely be down vs F16.

In reaction, Leerink Swann analyst David Larsen downgraded shares of McKesson from Outperform to Market Perform, with a price target of $160, which implies an upside of 29% from current levels.

Larsen commented, “MCK reported F2Q:17 adjusted EPS of $2.94 (-11% y/y) which was well below Leerink/Consensus of $3.10/$3.04. Management also reduced F2017 EPS guidance by $1.08 at the midpoint. We are downgrading the stock to Market Perform due to deteriorating fundamentals, including: (1) a significant slowdown in brand inflation, (2) far less generic inflation, (3) a slowdown in the value of generic launches, (4) a more competitive pricing environment, (5) a business model where manufacturers are demanding more...