McKesson Outlook - A Deep Dive into Technical Deterioration and Mixed Fundamentals

1. Market Snapshot

Headline Takeaway: McKesson (MCK) is under technical pressure despite recent fundamental strength—suggesting caution for new long positions.

2. News Highlights

• May 28 - HHS Letter on Gender-Affirming Care: The U.S. Department of Health and Human Services sent a controversial letter advising medical providers to reassess gender-affirming care protocols, which could impact health care policy and long-term spending dynamics.
• May 30 - Stanford Health Care Bond Sale: Stanford Health Care raised $424.9 million in a municipal bond sale to fund facility projects and debt refinancing—a sign of ongoing infrastructure investment in the health care sector.
• May 29 - AI in Health Care Billing: Tennessee startup Healthpoint Ventures announced an AI-driven billing solution for health care providers, hinting at long-term tech-driven cost-cutting in the industry.

3. Analyst Views & Fundamentals

McKesson’s recent fundamental performance appears strong, with an internal diagnostic score of 9.67, ranking it highly among peers. Here's a breakdown of the key fundamentals:

• Simple Average Rating: 3.00 (Neutral)
• Historical Weighted Rating: 3.23 (Slightly Bullish)
• Analyst Consistency: Ratings are consistent—Wells Fargo analyst Stephen Baxter recently assigned a “Neutral” rating on August 13, aligning with broader market expectations.
• Price Trend: The stock has risen 3.61% recently—matching the neutral-to-slightly bullish analyst expectations, though fundamentals are strong while technicals are weak.

Key Fundamental Values:

• Revenue-MV: 2.2519 (Internal diagnostic score: 3.00)
• Net Cash Flow from Operating Activities per Share (YoY growth rate %): 967.50 (Internal diagnostic score: 0.00)
• Net Profit Attributable to Parent Company Shareholders / Net Profit (%): 92.70% (Internal diagnostic score: 2.00)
• PE (Price to Earnings Ratio): 541.42 (Internal diagnostic score: 1.00)
• Cash-UP: 0.24 (Internal diagnostic score: 3.00)

4. Money-Flow Trends

McKesson is experiencing mixed money-flow trends. The fund-flow score is 7.92 (score level: good), but the overall trend remains negative. Here's the breakdown:

• Big Money (Extra-large): Inflow ratio is 49.00%, with a negative trend—suggesting institutional caution.
• Retail (Small): Inflow ratio of 51.00%, with a positive trend—showing retail investor optimism.
• Block Inflow Ratio: 49.39%, also with a negative trend, signaling possible profit-taking by larger players.

5. Key Technical Signals

McKesson’s technical picture is deteriorating rapidly. The technical score is 1.26, with a clear bearish bias. Here are the key indicators:

• WR Overbought: Internal diagnostic score: 2.03 (Neutral bias)
• RSI Overbought: Internal diagnostic score: 1.00 (Strongly bearish)
• Ex-Dividend Date: Internal diagnostic score: 1.00 (Strongly bearish)
• Dividend Record Date: Internal diagnostic score: 1.00 (Strongly bearish)

Recent Chart Patterns (Last 5 Days):

• September 10–11: WR and RSI overbought signals emerged, both indicating weakening momentum.
• September 2: The stock hit both Ex-Dividend and Dividend Record dates—historically associated with negative returns.

Key Insight: Four out of four technical indicators are bearish. The overall trend remains weak, and the model suggests avoiding the stock for now.

6. Conclusion

McKesson shows strong fundamentals but clearly weak technical indicators. While earnings and cash flow remain robust, the bearish technical environment and negative money flows suggest a risk-averse approach.

Actionable Takeaway: Consider holding off on new long positions and wait for a more favorable technical setup. For now, watch for a potential pullback or a shift in institutional sentiment.