McKesson Corporation (NYSE:MCK) shareholders are probably feeling a little disappointed, since its shares fell 8.9% to US$736 in the week after its latest yearly results. McKesson reported US$403b in revenue, roughly in line with analyst forecasts, although statutory earnings per share (EPS) of US$38.38 beat expectations, being 9.0% higher than what the analysts expected. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.

Taking into account the latest results, the most recent consensus for McKesson from 15 analysts is for revenues of US$431.7b in 2027. If met, it would imply a credible 7.0% increase on its revenue over the past 12 months. Statutory earnings per share are predicted to rise 5.4% to US$41.77. In the lead-up to this report, the analysts had been modelling revenues of US$442.2b and earnings per share (EPS) of US$40.71 in 2027. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

There's been no real change to the average price target of US$959, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on McKesson, with the most bullish analyst valuing it at US$1,065 and the most bearish at US$850 per share. The narrow spread of estimates could suggest that the business' future is relatively easy to value, or thatthe analysts have a strong view on its prospects.

Another way we can view these estimates is in the context of the bigger picture, such as how the forecasts stack up against past performance, and whether forecasts are more or less bullish relative to other companies in the industry. It's pretty clear that there is an expectation that McKesson's revenue growth will slow down substantially, with revenues to the end of 2027 expected to display 7.0% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 4.7% per year. So it's pretty clear that, while McKesson's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards McKesson following these results. They also downgraded McKesson's revenue estimates, but industry data suggests that it is expected to grow faster than the wider industry. Even so, earnings are more important to the intrinsic value of the business. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have forecasts for McKesson going out to 2029, and you can see them free on our platform here.

You still need to take note of risks, for example - McKesson has 1 warning sign we think you should be aware of.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.