MCK
McKesson Corporation
$1,004.84
Stable Earnings Power
80%
P/Adj-EPS × Normalized Multiple
Strong
·
Conviction
Overvalued
Trading 51.1% above fair value
You pay
$1,004.84
Bear
$532.19
Fair
$665.24
Bull
$798.28
Bear
$532.19
-47.0%
$38.38 × 14x P/E
Fair
$665.24
-33.8%
$38.38 × 17x P/E
Bull
$798.28
-20.6%
$38.38 × 21x P/E
Adjust Assumptions
17.3x
38.38$
Key Value Driver
Normalized P/E multiple (17x base case)
Implied Market Multiple
26.2x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (31 analysts)
$977.86
Divergence from AlphaVal
32%
Summary
Applying a 17x P/E to adjusted EPS of $38.38, the base-case value is $665.24 per share.
Warnings
Wall Street's average price target is $977.86 (from 31 analysts). Our estimate is 32% 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