Is MCK a good stock to buy? We came across a bullish thesis on McKesson Corporation on r/ValueInvesting by OnTheStreetwithLou. In this article, we will summarize the bulls’ thesis on MCK. McKesson Corporation’s share was trading at $763.91 as of June 23rd. MCK’s trailing and forward P/E were 19.41 and 16.81 respectively according to Yahoo Finance.
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McKesson Corporation provides healthcare services in the United States and internationally. MCK is presented as a compelling long-term compounder whose recent decline from nearly $1,000 per share to around $740 has created an attractive opportunity rather than signaling a deterioration in the underlying business. The selloff was largely driven by a fiscal 2026 fourth-quarter revenue miss, yet the company’s core investment thesis remains intact due to its dominant position in pharmaceutical distribution and disciplined capital allocation strategy.
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McKesson operates within a highly rational oligopoly alongside Cencora and Cardinal Health, collectively controlling most of the U.S. pharmaceutical distribution market. This market structure creates significant competitive advantages through scale, supply chain reliability, and deep customer relationships, as pharmacies and healthcare providers depend on distributors to efficiently manage inventory and working capital.
Despite operating margins of roughly 1.5%, McKesson generates substantial cash flow due to its asset-light business model, producing $5.4 billion of free cash flow in fiscal 2026. Management has consistently prioritized shareholder value creation, tying compensation to return on invested capital and adjusted earnings per share while aggressively repurchasing stock. Over the past two decades, the company has reduced its share count by more than 60%, enhancing per-share growth.
Beyond its core distribution operations, McKesson is strategically shifting toward higher-margin businesses, particularly its Oncology and Multi-Specialty segment, which delivered 31% revenue growth and 53% operating profit growth in fiscal 2026 while generating margins roughly double those of the traditional distribution business. The company also benefits from favorable long-term tailwinds, including an aging U.S. population and growing demand for GLP-1 therapies.
With return on invested capital reaching approximately 70% and a newly authorized $5 billion share repurchase program, the valuation appears attractive. Under highly conservative assumptions, intrinsic value is estimated at $885 per share, implying 18% upside, while a more realistic scenario suggests a value of $1,275 per share, representing approximately 70% upside from current levels.
Previously, we covered a bullish thesis on UnitedHealth Group Incorporated (UNH) by FluentInQuality in May 2025, which highlighted the company’s scale, vertically integrated Optum platform, and favorable healthcare industry tailwinds. UNH’s stock price has appreciated by approximately 38.72% since our coverage. OnTheStreetwithLou shares a similar view but emphasizes on McKesson Corporation’s pharmaceutical distribution oligopoly, capital-light cash generation, and shareholder-focused capital allocation.
McKesson Corporation is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 73 hedge fund portfolios held MCK at the end of the first quarter which was 72 in the previous quarter. While we acknowledge the risk and potential of MCK as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than MCK and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
