Bears Target McKesson

By David Russell

McKesson (MCK) has been moving straight up since April, and now the options action is turning negative.

Our Depth Charge tracking program detected money flowing into the December 60 puts, which traded 5,199 times against open interest of only 360 contracts. Big institutional-sized transactions priced for $0.70 to $0.75.

MCK, which is up slightly to $63.94 in morning trading, has risen 55 percent in the last six months. The provider of services to the medical industry reported better-than-expected earnings on Oct. 27 and raised its guidance for fiscal 2010.

The shares traded Tuesday at their highest price since January 2008, when MCK suffered a bearish reversal. Chart watchers may consider this level a natural point of resistance for the stock.

MCK needs to fall at least 7 percent for the puts to turn a profit.

Overall options volume in the name was 68 percent greater than average today. Puts exceeded calls by a bearish 57-to-1 ratio.

The downside trades in MCK come a day after an investor sold 1,000 January 85 calls on related company Cerner and bought 1,000 January 95 calls for a net $1.75. That call-spread transaction reflected a belief the shares have limited upside from the $79.19 level where they were trading at the time. CERN is up 0.56 percent to $80.01 today.

(Chart courtesy of tradeMONSTER)

Comments

[tagthatstock:]

i have no position in this stock, but it did show up on a scan to short,,,,but before i blindly start buying puts,,,,i look to see if there is a good enough reason. in the case of MCK there is no reason.

below are the keystats for the company,,,i really dont care what a company does as much as i want to see what the company is worth ,,,'can i buy out the company right here and now and bank a tiddy profit selling it to another',,,,,


so lets review some of the keystats:
Market Cap (intraday)5: 17.08B --what the traders value the co today

Enterprise Value (18-Nov-09)3: 16.38B ----todays fair value AND any debt issues

Revenue (ttm): 107.14B -----wow,,,for $16b i can buy a company making/pulling in 107b in revs,,,,NOW im really interested in the stock as a long,,,,,lets keep looking,,

Current Ratio (mrq): 1.214 ----well we know their debt is properly structured since their credit score is over 1.0

both cashflow data points are positve,,,that is really rare and cool! mgmt isnt asleep at the wheel.

profit margins are ok,,,i prefer higher,,but hey we are in a depression. (i can cut somewhere if i want higher margins,,but that isnt my goal right now as i am already stealing the company!

when i look over the company stats,,,they are worth at least 5x current $63 on face value alone. if you apply warren buffet math that would take the value of the company to over $500....(but lets not pump)

your 'put actions' are people attempting to steal the company,,,,they WANT the stock to come down to steal it,,,,,,bears need to come up with some real reasons to tank the stock.,,,,,,

bulls: enjoy the dips and buy MORE

again,,,no position.

VALUATION MEASURES

Market Cap (intraday)5: 17.08B
Enterprise Value (18-Nov-09)3: 16.38B
Trailing P/E (ttm, intraday): 20.58
Forward P/E (fye 31-Mar-11) 1: 13.39
PEG Ratio (5 yr expected): 1.25
Price/Sales (ttm): 0.16
Price/Book (mrq): 2.54
Enterprise Value/Revenue (ttm)3: 0.15
Enterprise Value/EBITDA (ttm)3: 7.295


FINANCIAL HIGHLIGHTS

Fiscal Year
Fiscal Year Ends: 31-Mar
Most Recent Quarter (mrq): 30-Sep-09


Profitability
Profit Margin (ttm): 0.79%
Operating Margin (ttm): 1.73%


Management Effectiveness
Return on Assets (ttm): 4.51%
Return on Equity (ttm): 13.01%


Income Statement
Revenue (ttm): 107.14B
Revenue Per Share (ttm): 395.354
Qtrly Revenue Growth (yoy): 2.10%
Gross Profit (ttm): 5.38B
EBITDA (ttm): 2.25B
Net Income Avl to Common (ttm): 850.00M
Diluted EPS (ttm): 3.10
Qtrly Earnings Growth (yoy): -8.00%


Balance Sheet
Total Cash (mrq): 3.22B
Total Cash Per Share (mrq): 11.997
Total Debt (mrq): 2.51B
Total Debt/Equity (mrq): N/A
Current Ratio (mrq): 1.214
Book Value Per Share (mrq): 25.073


Cash Flow Statement
Operating Cash Flow (ttm): 2.34B
Levered Free Cash Flow (ttm): 1.84B


View Financials (provided by EDGAR Online):
Income Statement - Balance Sheet
Cash Flow


TRADING INFORMATION


Stock Price History
Beta: 0.87
52-Week Change3: 88.69%
S&P500 52-Week Change3: 29.24%
52-Week High (16-Nov-09)3: 64.98
52-Week Low (20-Nov-08)3: 28.27
50-Day Moving Average3: 60.77
200-Day Moving Average3: 51.27


Share Statistics
Average Volume (3 month)3: 2,234,130
Average Volume (10 day)3: 1,642,090
Shares Outstanding5: 267.98M
Float: 267.31M
% Held by Insiders1: 0.24%
% Held by Institutions1: 87.00%
Shares Short (as of 30-Oct-09)3: 3.09M
Short Ratio (as of 30-Oct-09)3: 1.2
Short % of Float (as of 30-Oct-09)3: 1.50%
Shares Short (prior month)3: 3.38M


Dividends & Splits
Forward Annual Dividend Rate4: 0.48
Forward Annual Dividend Yield4: 0.70%
Trailing Annual Dividend Rate3: 0.48
Trailing Annual Dividend Yield3: 0.80%
5 Year Average Dividend Yield4: 0.70%
Payout Ratio4: 15%
Dividend Date3: N/A
Ex-Dividend Date4: 27-Nov-09
Last Split Factor (new per old)2: 2:1
Last Split Date3: 05-Jan-98

Nov 18 07:08 AM

[tagthatstock:]

as an alternative,,,,,,GPN $53.76 is greatly overpriced (its not a crash and burn to the pennies kind of stock,,but it is overpriced (x20+/- over MCK)


GPN data....company is NOT cheap,,its over valued!
Enterprise Value/Revenue (ttm)3: 2.30

jan puts are very attractive

PUT OPTIONS Expire at close Fri, Nov 20, 2009

Strike Symbol Last Chg Bid Ask Vol Open Int
17.50 GPNWW.X 0.40 0.00 N/A N/A 0 10
25.00 GPNWE.X 0.35 0.00 N/A N/A 15 45
30.00 GPNWF.X 0.90 0.00 N/A N/A 16 78
35.00 GPNWG.X 0.15 0.00 N/A N/A 10 204
40.00 GPNWH.X 0.05 0.00 N/A N/A 5 287
45.00 GPNWI.X 0.25 0.00 N/A N/A 10 173
50.00 GPNWJ.X 0.05 0.00 N/A N/A 10 151

again,,,,,i have NO position...but bears are better off targeting GPN instead of MCK.

Nov 18 07:25 AM

[tagthatstock:]

i noticed i posted GPN nov puts,,my intent was the GPN jan puts

PUT OPTIONS Expire at close Fri, Jan 15, 2010

Strike Symbol Last Chg Bid Ask Vol Open Int
10.00 GPNMB.X N/A 0.00 N/A N/A 0 26
12.50 GPNMV.X N/A 0.00 N/A N/A 0 10
17.50 GPNMW.X N/A 0.00 N/A N/A 0 20
20.00 GPNMD.X N/A 0.00 N/A N/A 0 76
22.50 GPNMX.X 0.45 0.00 N/A N/A 0 80
25.00 GPNME.X N/A 0.00 N/A N/A 0 70
30.00 GPNMF.X 0.40 0.00 N/A N/A 15 99
35.00 GPNMG.X 0.20 0.00 N/A N/A 5 167
40.00 GPNMH.X 0.75 0.00 N/A N/A 20 730
45.00 GPNMI.X 0.75 0.00 N/A N/A 11 91
50.00 GPNMJ.X 3.00 0.00 N/A N/A 7 227
55.00 GPNMK.X 3.20 0.00 N/A N/A 4 21

Nov 18 07:52 AM

[singh:]

what an anylysis tagthatstock
GS needs to hire u

Nov 18 10:28 AM

[tagthatstock:]

i think its going to be a cash christmas
i did buy puts in jan and it took the mm forever to fill me at ask.

On Nov 18 10:28 AM singh wrote:

> what an anylysis tagthatstock
> GS needs to hire u

Nov 18 10:33 AM