The Federal Reserve announced the third consecutive 75-basis-point interest rate hike last month and signaled more hikes this year to battle soaring prices. The economy seems to be on the brink of…
a recession amid such aggressive hikes.
JPMorgan CEO Jamie Dimon warned that the U.S. would likely fall into a recession in 2023, and it may not be just a mild contraction that some investors are expecting. “It can go from very mild to quite hard, and a lot will be reliant on what happens with this war. So, I think to guess is hard, be prepared,” he said.
On the bright side, the economy added 2,63,000 jobs in September, close to the Dow Jones estimate, and the unemployment rate came down to 3.5% from 3.7% in the previous month. This signals a resilient labor market despite the macroeconomic issues. However, a strong job market might motivate the Fed to maintain its hawkish stance.
While the stock market is expected to remain under pressure due to the uncertain macroeconomic backdrop, Wall Street analysts expect McKesson Corporation (MCK), AmerisourceBergen Corporation (ABC), and TravelCenters of America Inc. (TA) to witness reasonable upsides based on their fundamental strength. So, these stocks could be wise to add to your portfolio.
McKesson Corporation (MCK)
MCK is a diversified healthcare service provider focusing on advancing patients’ health outcomes globally. The company operates through four segments U.S. Pharmaceutical; Prescription Technology Solutions; Medical-Surgical Solutions; and International.
On September 29, MCK announced its agreement to extend its long-standing partnership with CVS Health Corporation (CVS) to distribute pharmaceuticals to mail-order and specialty pharmacies, retail pharmacies, and distribution centers through June 2027. This should continue to be beneficial for the company.
In the same month, MCK signed a definitive agreement to acquire Rx Savings Solutions for $875 million. RxSS is a prescription price transparency and benefits insight company offering affordable and adherence solutions to health plans and employers.
“Rx Savings Solutions’ offerings for employers and patients will strengthen McKesson’s ability to help solve the most common medication challenges related to access, affordability and adherence,” said Brian Tyler, CEO of MCK.
In the fiscal first quarter ended June 30, 2022, MCK’s total revenues increased 7.2% year-over-year to $67.15 billion. Income from continuing operations attributable to MCK during the quarter increased 56.6% year-over-year to $766 million, while net income attributable to MCK increased 58% from the year-ago value to $768 million. Additionally, the company reported an adjusted EPS of $5.83 for the quarter, registering an increase of 4.9% year-over-year.
Analysts expect MCK to report revenue and EPS of $277.29 billion and $24.41 for the fiscal year ending March 2023, registering an increase of 5.1% and 3% year-over-year, respectively.
The stock has gained 73.5% over the past year and 39.7% year-to-date. The 12-month median price target of $395.67 indicates a 13.9% potential upside.
MCK’s POWR Ratings reflect solid prospects. According to our proprietary rating system, it has an overall rating of A, translating to a Strong Buy. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It also has an A grade for Growth and a B for Value, Stability, and Sentiment. Within the Medical – Services industry, it is ranked first out of the 80 stocks. Click here to access MCK’s ratings for Momentum and Quality.
AmerisourceBergen Corporation (ABC)
ABC is a global pharmaceutical sourcing and distribution services company that operates through two segments Pharmaceutical Distribution; and Other. It conducts its operations in the United States and internationally.
On September 12, ABC announced its agreement to…
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