| Stock (Symbol) | Stock Price | |
Express Scripts (ESRX) |
$60 |
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| Data is as of | Expected to Report | Sector |
May 13, 2011 |
Jul 25 |
Healthcare |
| Sharek’s Take | ||
 Express Scripts is hitting all-time highs. Surprising because the stock dropped after reporting last quarter’s earnings on April 25th. ESRX missed estimates because it had to give money away to get new customers — bad in the short-run and good in the long-run. Obviously the smart money has taken over control of this stock. The drop was only $55 to $54 on the chart, but ESRX did sell for less after hours.
There will be a good supply of new generics coming in 2012 and 2013 and this will boost profitability for pharmacy benefit managers (PBM) like ESRX. Long-term, the future is bright, and the company even re-buys its own stock (up to 7% of the shares outstanding). |
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| One-Year Chart | ||
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The 19 P/E is higher than ESRX usually sells for. I always thought this stock deserved a P/E in the 20s. Estimates for the next two quarters look good, so this breakout could lead to bigger things ahead. |
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| Earnings Table | ||
 Profits grew 20% last quarter on relatively flat sales growth. Sales are expected to rise 2% this year. ESRX can switch customers from brand name drugs to generics, this brings down prices and helps profits.ESRX missed by 3 cents last quarter, the first real miss I can remember (I’ve owned ESRX for clients since 2001).
Annual Profit Estimates fell a bit for 2011 and rose somewhat for 2012 and 2013. 23% profit growth is expected for 2012 followed by 19% in 2013. One word: generics. Quarterly estimates show the near-term weakness should last another quarter, but after that profit growth should be great — and these estimates increased. 30% growth is coming! |
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| Fair Value | ||
 The move higher ESRX just made has put the stock within 17% of its Fair Value. A little more P/E combined with 23% profit growth in 2012 leads to solid 40% plus upside. |
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| Ten-Year Chart | ||
 Express Scripts has been — and continues to be — one of my favorite stocks. The ten-year chart is a piece of art. Let’s just stare at it, shall we? |
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| Power Ranking | Bottom Line | |
Growth Portfolio
11 of 20 |
A slew of generics will hit the market in 2012 and 2013 and will be a boost for profitability. This stock is a solid winner.
ESRX is the 11th best stock in the 20 stock Growth Portfolio Power Rankings. I sold this stock in the Aggressive Growth Portfolio recently, and don’t have a strong indication that ESRX can continue higher, so I doubt I will be buying it back here. |
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Aggressive Growth Portfolio
N/A |
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This one-year chart shows the breakout to a new high this week. Healthcare has been a leading area this year. Money’s coming in.