McKesson's (MCK) fiscal 2027 guidance is "encouraging," and its commentary on biosimilars should help ease recent pressure on drug distributors, Morgan Stanley said in a Friday note.

The investment firm said McKesson's targets and underlying assumptions support their bullish outlook on distributors that continue to benefit from structural tailwinds.

On Cencora (COR), the brokerage said the company faces idiosyncratic contract dynamics with Express Scripts that could lead to continued insourcing of biosimilar specialty drugs and add an overhang to the stock. The recent pullback in Cencora shares was overdone, according to the note.

Morgan Stanley raised their fiscal 2026 adjusted earnings estimate on Cencora to $17.76 from $17.63. Analysts surveyed by FactSet expect $17.73.

Morgan Stanley has an overweight rating and a $966 price target on McKesson.

The firm reiterated its overweight rating on Cencora and lowered its price target to $342 from $400.

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