Rectangle Pattern Suggests a Significant Move in McKesson (MCK) Soon

A rectangle pattern has emerged in the chart of McKesson Corp. (MCK).  If the stock breaks the top of the rectangle pattern, the resistance, a breakout could occur.  And if the stock falls below the bottom of the rectangle pattern, the support, a breakdown could occur…

McKesson Corp. (MCK) is the largest leading third-party logistics provider. The company is engaged in wholesale pharmaceutical and medical products sourcing, distribution and dispensing, contract manufacturing, and related IT services to acute care hospitals and health systems, independent and chain retail pharmacies in North America, Europe, and Canada.

MCK had a strong fiscal third quarter outperforming estimates. In November, the company completed the contribution of its German wholesale business to a joint venture with Walgreens Boots Alliance (WBA). It also introduced Ontada, an oncology technology and insights business in its U.S. Pharmaceutical segment.

The company had $3.6 billion in cash and cash equivalents as of the end of the year, compared with only $929 million in short-term debt. MCK has a stable history of revenue growth and is expected to increase revenue 4.1% this quarter. Earnings are forecasted to rise 16.9% in the same quarter.

The stock is trading at a low multiple with a trailing P/E of 14.38 and a forward P/E of 9.23. Its near-term performance has been trending downward, resulting in a Momentum Grade of D in our POWR Ratings system and can be seen in the chart below.  

Take a look at the 1-year chart of MCK below with added notations…

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