Pharmacy Benefit Managers Dominate Medical Earnings Tuesday (MHS, ESRX)

Pharmacy benefits managers Express Scripts Inc. (NASDAQ: ESRX) and MedcoHealth Solutions Inc. (NASDAQ: MHS) are both set to report earnings on Tuesday.

We’ll get to see earnings out of MedcoHealth Solutions Inc. (NASDAQ: MHS) early Tuesday morning.  The estimates for the pharmacy benefit manager from First Call are $0.53 EPS on $12.25 billion in revenues.  Next quarter estimates are $0.56 EPS on $12.24 billion in revenues. Estimates for fiscal Dec-2008 are $2.30 EPS on $49.40 billion in revenues.  Options traders appear to be braced for a move of $1.40 to $1.70 in either direction.  Analysts have an average price target north of $59.00, and MedCo’s 52-week trading range is $35.12 to $54.63. This closed at $51.31 Monday, so shares are still holding rather well as this is a defensive stock.

Tuesday after the close we’ll get to see earnings out of Express Scripts Inc. (NASDAQ: ESRX), although its management conference call appears to be scheduled for the following morning. The estimates for the pharmacy benefit manager from First Call are $0.67 EPS on $4.78 billion in revenues.  Next quarter estimates are $0.72 EPS on $4.85 billion in revenues. Estimates for fiscal Dec-2008 are $2.98 EPS on $19.44 billion in revenues.  Options traders appear to be braced for a move of close to $3.00 in either direction.  Analysts have an average price target north of $78.00, and Express Scripts’ 52-week trading range is $46.17 to $79.10.  This closed at $73.56 Monday, so shares are still holding rather well as this is also a defensive stock.

Both pharmacy benefit managers took a hit after the first part of the 2008, but shares have recovered and are both within striking distance of their 52-week highs.  As far as defensive stocks for defensive investors, these are supposed to do well regardless of who is in charge of Congress and regardless of who is President.

Jon C. Ogg
April 28, 2008