MCK
McKesson Corporation
$766.08
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Fair Value
Trading 4.0% below fair value
You pay
$766.08
Bear
$638.38
Fair
$797.98
Bull
$957.57
Bear
$638.38
-16.7%
$41.17 × 14x P/E
Fair
$797.98
+4.2%
$41.17 × 17x P/E
Bull
$957.57
+25.0%
$41.17 × 21x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
18.6x
Summary
Our base-case estimate uses a valuation based on adjusted earnings per share and a normalized price-to-earnings multiple. We then blend that result with the average analyst price target of $994.86 from 31 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $797.98 per share.
Warnings
Wall Street's average price target is $994.86 (from 31 analysts). Our estimate is 28% below the consensus -- consider that gap carefully.
Key Risks
- Growth DCF inappropriate — terminal value assumptions dominate
- EV/EBITDA misleading for regulated businesses where capex is mandated
- Regulatory risk is a fat tail not visible in normal multiples