MCK
McKesson Corporation
$889.50
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Mild
·
Conviction
Overvalued
Trading 11.2% above fair value
You pay
$889.50
Bear
$640.18
Fair
$800.22
Bull
$960.27
Bear
$640.18
-28.0%
$41.24 × 14x P/E
Fair
$800.22
-10.0%
$41.24 × 17x P/E
Bull
$960.27
+8.0%
$41.24 × 21x P/E
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
21.6x
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 $999.33 from 31 analysts, using a 30% weight on analyst consensus. That produces an estimated intrinsic value of $800.22 per share.
Warnings
Wall Street's average price target is $999.33 (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