The Express Scripts Inc. (ESRX) train is leaving the station: hence, I'm reiterating my buy rating for the company's shares, first recommended on June 9, 2009 at a price of $63.64. If you bought ESRX in June, you're up about 35%.
Simply, an aging populace, plus a likely renewed emphasis on health and wellness in the United States, and the probability of federal, health care reform legislation, bodes well for many health care players, and pharmacy benefits managers like ESRX.
Further, the super-smart acquisition of NextRx should increase the company's earnings by $1 billion annually. The First Call FY2009/FY2010 EPS estimates for ESRD are $3.45 to $4.70.
Technically, Express Scripts' stock chart is strong -- an uptrend, and one where the price remains above the key, 50-day moving average -- a sign that institutional investors (IIs) are establishing/adding to positions. However, wait for a pull-back to Buy ESRX, if given the chance, but know that longer-term, ESRX is headed north.
Finally, the Sell/Stop Loss has been raised to $64, or to just above cost, from $36. Hence, this is a zero-risk trade for your June-bought shares.
Stock Analysis: Express Scripts is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 25% position in ESRX on a pull-back to $81-$84; then buy another 25% in one month, if U.S. economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your ESRX position before February 2010. Revised Sell/Stop Loss if you bought shares in this company: $64.
Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.
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