The market's choppy/consolidating tone, combined with the slow-growth/no-growth U.S. economy, suggests it is prudent to add a defensive stock or two to your portfolio, and with the aforementioned in mind, Medco Health Solutions is worth a review.

Medco Health Solutions (NYSE: MHS) is one of the largest U.S. pharmacy benefit managers, with services provided to client/member PBMs and physicians/pharmacies. (Note: Medco Health's shares split 2-for-1 on January 10, 2008.)

Analysts like Medco's high account retention, new business wins, economies of scale, and the company's entry into the Medicare Part B segment with its acquisition of PolyMedica.
Analysts see FY 2008 revenue increasing 10-14% on new business, selected pricing power, and the launch of key generic drugs, including Fosamax for osteoporosis. Medco also should benefit from the long-term trend by companies, governments, and health plans to limit increases in drug costs. The Reuters FY 2008/FY 2009 EPS consensus estimates for MHS are $2.30 to $2.71.

The risks? Analysts are keeping an eye on the health care regulatory environment, particularly changes that could occur after the November 2008 election.

The First Call mean rating for MHS is: Buy [24 firms]. Mean 2008 target: $60 [high: $70, low: $55].

Stock Analysis: Medco Health is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from MHS's shares. Sell/Stop Loss if you to purchase shares in this company: $33.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.