Pharmacy benefits manager Express Scripts (ESRX), which I first wrote about on June 9, 2009, at a 2-for-1 split-adjusted price of $31.82, zipped through major, psychological resistance at $50 this winter. It pushed $59, before pulling back slightly, but I obviously still like the business model at this juncture.

Look for the company's 2011 revenue to rise 3% to 5% on new accounts and the NextRx PBM purchase, after a nearly doubling of revenue in 2010.

Analyst upgrades:

• Verizon (VZ) to conviction buy from buy at Goldman.
• CSX (CSX) to outperform from market perform at Wells Fargo.
• AK Steel (AKS) to overweight from neutral, as well as Lorillard (LO) and Fifth Third Bancorp (FITB) to neutral from underweight, at JPMorgan.
• Marathon Oil (MRO) to overweight from equal weight at Morgan Stanley.
• Corning (GLW) to buy from outperform at CLSA.
• Quest Diagnostics (DGX) to buy from hold at Jefferies and to outperform from sector perform at RBC Capital.
• Salesforce.com (CRM) to buy from neutral at Roth Capital.
• Baker Hughes (BHI) to buy from hold at Weeden and to outperform from neutral at Macquarie.
• Western Digital (WDC) and Seagate (STX) to buy from underperform at BofA/Merrill.

The positive story continues with pharmacy benefits manager Express Scripts Inc. (ESRX), which I first wrote about on June 9, 2009, at a 2-for-1, split-adjusted price of $31.82.

In fact, the uptrend has been so impressive, Express traded near $56 on Friday, those in since June 2009 may wish to consider taking some profits off the table, to say the least. It never hurts a portfolio to take a portion of a roughly 80% gain.

The shares of pharmacy benefits manager Express Scripts (ESRX), which I first wrote about on June 9, 2009, at a 2-for-1 split-adjusted price of $31.82, remains a play with promise.

Express's 2010 revenue will likely vault more than 80% on new accounts and the NextRx PBM purchase. Express is in a "prescription sweetspot" of sorts: an aging populace, plus a likely renewed emphasis on health and wellness in the United States, and the possibility of federal, health care reform legislation, bodes well for many health care players, and pharmacy benefits managers.

"Pharmacy benefits managers (PBMs) are the main distributors of drugs to retail pharmacies and directly to consumers; in our view, the PBM sector is a must-have health care area for investors," says Stephen Leeb.

The editor of The Complete Investor explains, "Express Scripts (ESRX) is a leading and fast-growing pure-play PBM that has been generating impressive results and is undervalued relative to the industry.

"One striking health care trend in recent years has been a dramatic rise in prescriptions. For the 10 years ended in 2009, according to a government study, the number of prescription drugs dispensed in the U.S. rose 39 percent, while U.S. population growth was just 9 percent.

Express Scripts (ESRX - option chain) shares are rising today just ahead of the completion of the company's scheduled 2:1 stock split. Tomorrow morning, investors will find twice as much ESRX stock in their accounts and the price should be about halved. A split is often viewed as a bullish indicator, since the stock seems cheaper after the split, even though all things are essentially equal. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on ESRX.

ESRX opened this morning at $100.02. So far today the stock has hit a low of $99.96 and a high of $104.16. As of 12:20, ESRX is trading at $103.90 up $4.74 (4.8%). The chart for ESRX looks bullish and S&P gives ESRX a positive 5 STARS (out of 5) strong buy ranking.

Now that health care reform is a done deal, with the ink from President Obama's signature yesterday still drying, it's time to talk about how to profit from the new legislation.

I know many parts of the legislation may not sit well with some of you -- whether it be the taxes on dividends used to pay for reforms or the general idea of Uncle Sam getting deeper into entitlement spending even as businesses are generally reducing their debt loads. But what's done is done and there's no use grousing about it. As investors, it's not our job to judge how good or bad the news is but only to judge how to cash in.

Pharmacy benefits manager Express Scripts (ESRX), which I first wrote about on June 9, 2009 at a price of $63.64, remains a company and stock with promise. Here's why:

An aging populace, plus a likely renewed emphasis on health and wellness in the United States, and the possibility of federal health care reform legislation bodes well for many health care players, including pharmacy benefits managers like ESRX.

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.

I'm Reiterating my Buy rating for Express Scripts (NASDAQ: ESRX), first recommended on June 9, 2009 at a price of $63.64, and the reason isn't the stuff of rocket science.

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, including pharmacy benefits managers like ESRX. If you bought the shares on June 9, you're up about 20%.

An aging populace, plus likely, renewed emphasis on health and wellness in the United States bodes well for many health care players, and pharmacy benefits manager Express Scripts, Inc. (Nasdaq: ESRX) is one.

In general, analysts see F2009 revenue for ESRX falling about 1-2%, exclusive of results from WellPoint, Inc. (NYSE: WLP), which Express Scripts agreed to acquire earlier this year, pending approvals.

An active pharmacy benefits manager should smooth the path between patients and their prescription medications. There is an outfit in St Louis that handles the job well. It was the recipient of Fortune's first-ever "Streetie Award" for the best overall performance by any company.

Express Scripts (NASDAQ: ESRX) is one of the largest pharmacy benefit management companies in North America, serving over 50 million members through managed-care organizations, insurance carriers, employers and workers compensation groups. Services include network-pharmacy claims processing, formulary management, home delivery services, drug-utilization review, disease management and medical-data analysis services. The company also distributes a full range of injectable and infusion biopharmaceutical products directly to patients.

Express Scripts Inc. (NASDAQ: ESRX) stock is trading much lower today after competitor Walgreen Co. (NYSE: WAG) announced a 4% Q4 profit drop, and missed earnings expectations by 7 cents, sending the stock spiraling down over 12% in early trading. If you think this stock could get hurt by the same issues as WAG and won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ESRX.

The stock has been climbing gently over the past several months, reaching a one-year high of $56.08 on Friday. This morning, ESRX opened at $55.20. So far today the stock has hit a low of $53.48 and a high of $55.30. As of 11:05, ESRX is trading at $54.67, down $1.15 (-2.1%). The chart for ESRX looks bearish with significant improvement, while S&P gives the stock an encouraging 4 STARS (out of 5) buy rating.

For a bearish hedged play on this stock, I would consider a November bear-call credit spread above the $60 range. A bear-call credit spread is an options position that combines the purchase and sale of call options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 9.9% return in 7 weeks as long as ESRX is below $60 at November expiration. Express Scripts would have to rise by more than 10% before we would start to lose money.

ESRX has never been above $60, and could be held down by resistance at the $55 level.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: At publication time, Brent neither owns nor controls positions in ESRX.

MOST NOTEWORTHY: GlaxoSmithKline plc (NYSE: GSK), Express Scripts, Inc (ESRX), SanDisk Corp (SNDK), Halliburton Co (HAL) and Texas Instruments (TXN) were some of today's noteworthy upgrades.

• Deutsche Bank upgraded GlaxoSmithKline plc (NYSE: GSK) to Buy from Hold.

• Express Scripts Inc (NASDAQ: ESRX) was upgraded to Strong Buy from Buy with a $113 target at First Albany, following the stronger-than-expected first quarter results.

• SanDisk Corp (NASDAQ: SNDK) was upgraded to Buy from Hold at Citigroup.

• Halliburton Co (NASDAQ: HAL) was added to AG Edwards Focus Portfolio. The firm believes Halliburton trades at a great discount to its largest peer, Schlumberger Ltd (SLB), despite an improved earnings outlook and progress on several issues.

• Texas Instruments (NASDAQ: TXN) was upgraded to Buy from Hold at Gabelli to reflect strong first quarter results and valuation. Piper Jaffray upgraded shares of Texas Instruments to Outperform from Market Perform...
  

OTHER UPGRADES:

• Keefe Bruyette upgraded shares of BancFirst Corp (NASDAQ: BANF) to Market Perform from Underperform following its first quarter report.

• Raymond James raised Cardinal Health, Inc (NYSE: CAH) to Outperform from Market Perform.

• Matrix USA raised H.B. Fuller Co (NYSE: FUL) to Hold from Sell based on the company's sales growth.

• Baird raised Snap-on Inc (NYSE: SNA) rating to Outperform from Neutral with a $55 target.

• Bear Stearns upgraded shares of Cummins Inc (NYSE: CMI) to Peer Perform from Underperform.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).

MOST NOTEWORTHY: The pharmacy benefit managers sector, financials E*Trade Financial Corp (ETFC) and TD Ameritrade Holding Corp (AMTD) and transports J.B. Hunt Transport Services (JBHT) and Knight Transportation (KNX) were today's most noteworthy initiations:

• CIBC is positive on the pharmacy benefit managers group given increasing generic utilization, continued growth in specialty pharmacy, improving mail-order penetration and share repurchases. CIBC initiated Express Scripts, Inc (NASDAQ: ESRX) with a Sector Outperformer and $104 target as the firm expects continued strong performance as the company benefits from positive secular industry trends, and initiated Medco Health Solutions (NYSE: MHS) with a Sector Performer and $82 target on valuation.
• BMO capital started E*Trade Financial Corp (NASDAQ: ETFC) and TD Ameritrade Holdings Corp (NASDAQ: AMTD) with Outperform ratings.
• Cathay Financial started J.B. Hunt Transport (NASDAQ: JBHT) and Knight Transportation (NYSE: KNX) with Neutral ratings.

OTHER INITIATIONS:

• BMO started Charles Schwab Corp (NASDAQ: SCHW) with a Market Perform rating
• Citigroup started NYSE Euronext (NYSE: NYX) with a Buy rating and $113 target.
• AG Edwards initiated shares of La Jolla Pharmaceutical Co (NASDAQ: LJPC) with a Buy rating and $11 price objective.

Analyst summaries provided by TheFlyOnTheWall.com (subscription required).