by Sam Collins | September 26, 2013 2:30 am
Express Scripts (ESRX) — Following its merger with Medco Health Solutions in 2012, Express Scripts is the largest player in the pharmacy benefits management industry, managing more than 1 billion prescriptions annually for tens of millions of patients.
Analysts expect ESRX to grow at much higher-than-average industry rates thanks to cost synergies from Medco, expansion of mail-order generics, and the phasing-in of health insurance coverage under the Affordable Care Act. Express Scripts earned $1.79 in 2012; the consensus estimate for 2013 is $4.31 and analysts look for $4.94 in 2014. Price targets range from $73.50 to $80.
Last July, after it favorably ended a dispute with Walgreen (WAG), we placed ESRX on the buy list at $59 with a trading target of $66, which it achieved on Oct. 5. The stock fell from favor in late 2012 but held on its bullish support line in November and advanced to a high of over $67 in July of this year. This September profit taking dropped ESRX close to its bullish support line and 200-day moving average, where it reversed on Tuesday following three days of high-volume buying.
Buy Express Scripts at under $64 with a trading objective of $73. Investors might want to hold ESRX as a long-term holding with expectations of high growth in the healthcare sector.
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