McKesson Corporation (MCK): A Bull Case Theory

We came across a bullish thesis on McKesson Corporation on The Buyside Guy’s Substack. In this article, we will summarize the bulls’ thesis on MCK. McKesson Corporation’s share was trading at $710.94  as of August 4^th. MCK’s trailing and forward P/E were 27.17 and 18.69, respectively according to Yahoo Finance.

McKesson (MCK) is one of the largest pharmaceutical distributors in the U.S., moving nearly a third of all prescription drugs across North America and controlling 38.1% of the U.S. distribution market alongside AmerisourceBergen and Cardinal Health. Acting as the infrastructure layer of the healthcare system, McKesson provides logistics, inventory management, credit risk handling, and compliance, operating on razor-thin margins that make the business highly defensible and nearly impossible for new entrants.

Even retail giants like CVS and Walgreens depend on its efficiency, with most pharmacy orders fulfilled within 24 hours. Its moat lies in compliance—McKesson must meet stringent DEA and DSCSA requirements, tracking every pill through the supply chain, which creates significant barriers to entry and customer stickiness. The business model is stable: branded drugs generate fixed fees per unit, insulating earnings from price swings, while generics—though lower revenue—deliver higher margins and account for about 29% of operating profit. Customer concentration is notable, with CVS and Walmart together contributing roughly 14% of operating income.

While McKesson trades defensively during market volatility, short-term earnings misses can pressure the stock. A key catalyst is the planned spin-off of its Medical-Surgical segment, which has higher margins (8–10%) but adds volatility; separation could unlock valuation clarity and upside. Currently, McKesson trades at 17.8x FY’26 EPS, above its 10-year average of ~14.5x, reflecting strong fundamentals like a 17% five-year EPS CAGR and 7% buyback CAGR. Though not cheap today, a pullback to $550–$600 could offer an attractive entry point into this essential, scale-driven business.

Previously, we covered a bullish thesis on Quipt Home Medical Corp. (QIPT) by Inflexio Research in March 2025, which highlighted its recurring revenue base, activist involvement, and buyout potential. The stock has appreciated about 4.78% since then as recovery signs emerged. The thesis still stands with strategic catalysts intact. The Buyside Guy shares a similar view on defensiveness but emphasizes McKesson’s scale, compliance moat, and Med-Surg spin-off catalyst.

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Disclosure: None.