Three Stocks Likely to Announce Upcoming Stock Splits
Stock Splits Overview: Stock splits are actions taken by companies to make their shares more affordable for retail investors, typically occurring after periods of significant growth or innovation.
Investor Psychology: The intrinsic value of a company remains unchanged after a stock split, but investor psychology plays a crucial role in driving short-term performance, as lower-priced shares may attract more buyers.
Examples of Companies: Companies like Costco and Walmart have announced stock splits, with Costco's stock trading over $1,000 per share and Walmart's split planned for January 2024, reflecting strong share price growth.
Future Stock Splits: Analysts suggest that companies like KLA Corporation and Eli Lilly may consider stock splits in the future, driven by their strong growth stories and increasing share prices, which could benefit investors.
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- Strategic Milestone: McKesson Corporation announced a deal with Apollo Funds to sell a minority stake in its Medical-Surgical Solutions (MMS) business, marking a significant milestone in its separation strategy in preparation for a planned initial public offering (IPO).
- Significant Investment: Apollo Funds will invest $1.25 billion in convertible preferred equity of MMS to acquire approximately 13% minority interest, valuing MMS at around $13 billion, reflecting strong market confidence in the business.
- Positive Market Reaction: This transaction not only provides McKesson with financial support but also strengthens its market position in the healthcare sector, expected to drive future growth and enhance investor confidence.
- Future Development Potential: By partnering with Apollo Funds, McKesson can accelerate the independent growth of MMS, further optimizing its business structure and laying a solid foundation for the upcoming IPO to attract more investor interest.
- Investment Announcement: MCKESSON CORP has announced a significant investment of $1.25 billion.
- Focus on Minority Interest: The investment is aimed at acquiring a 13% minority interest in a company referred to as MMS.
- Investment Scale: Apollo Global Management's affiliated funds are set to invest $1.25 billion in convertible preferred equity in McKesson's Medical-Surgical Solutions unit, valuing it at approximately $13 billion, reflecting strong confidence in the healthcare sector.
- Strategic Milestone: McKesson CEO Brian Tyler stated that this transaction marks a key milestone in the company's planned separation of the Medical-Surgical Solutions unit, potentially laying the groundwork for future independent operations.
- Market Reaction: Following the announcement, Apollo's stock fell 1.66% to $122.55 in pre-market trading, while McKesson's stock rose 0.30% to $869.00, indicating a cautious market response to the deal.
- Industry Outlook: This investment not only strengthens Apollo's positioning in the healthcare sector but may also provide McKesson with additional capital support, thereby driving further expansion in the medical solutions market.
- Market Surge: Following Trump's announcement of a two-week ceasefire between the U.S. and Iran, stocks soared, with S&P 500 futures rising sharply, reflecting market optimism about the potential end of the conflict.
- Crude Price Plunge: The ceasefire led to an 18% drop in West Texas Intermediate futures to around $92 per barrel, while Brent oil fell 16.7%, alleviating inflationary pressures and potentially boosting consumer spending.
- Airline Stocks Rally: Lower crude prices resulted in significant gains for airlines, with United Airlines up over 12% and Delta Air Lines rising about 11%, indicating that reduced fuel costs could enhance profitability and stimulate travel demand.
- Tech Stocks Strengthen: Stocks like Sandisk and On Semiconductor, identified by JPMorgan as inversely correlated with WTI, saw premarket gains of 9% and 5% respectively, suggesting renewed investor confidence in technology amid the positive market sentiment.
- Core Business Growth: McKesson achieved an 11% revenue growth and a 13% operating profit growth in Q3, primarily driven by broad momentum in oncology, multispecialty, and pharmaceutical distribution, showcasing the company's strong competitiveness in high-growth healthcare sectors.
- Specialty Drug Boost: Revenues from GLP-1 therapies rose 26% year-over-year to $14 billion, indicating the company's significant advantage in distributing high-cost, complex therapies, which enhances margins and market share.
- Acquisition-Driven Profitability: The oncology and multispecialty segment saw a 57% operating profit growth, supported by acquisitions like PRISM Vision and Florida Cancer Specialists, reinforcing McKesson's strategic position in high-margin service platforms.
- Medical-Surgical Segment Challenges: The Medical-Surgical segment reported only 1% revenue growth and a 10% decline in operating profit, reflecting its sensitivity to external factors, which may limit overall growth potential and impact consolidated performance.
- Oil Price Surge Impact: Stocks fell as Brent crude briefly hit $119 per barrel following Iran's attack on a key LNG facility in Qatar, causing the S&P 500 to slip below its 200-day moving average for the first time since last May, raising concerns among long-term investors.
- Eli Lilly Drug Study Update: Eli Lilly reported that its Phase 3 study of retatrutide for type 2 diabetes showed superior weight loss compared to Mounjaro over 40 weeks, yet the stock remained stagnant as investors are more focused on the anticipated approval of its new GLP-1 pill next month.
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