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Express Scripts (ESRX) is a pharmacy benefit management company. The Company’s clients are managed care organizations, health insurers, third-party administrators, employers, union-sponsored benefit plans, workers' compensation plans and government health programs. The Company manages outpatient prescription drug utilization to drive pharmaceutical care. The company also distributes specialty pharmaceuticals and medications
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Express Scripts is a TOP Purple Chip. We last invested in Express Scripts in 2014 and delivered a solid +41.5% return.
The company is distinguished by its lack of declining quarters in its trailing earnings history since 1996. The stock declined recently due to the threat of increasing competition and weakness in the healthcare sector. However, we believe the current valuation at 12X earnings is more than enough reason to buy this great company.
We think the bad news is discounted in the valuation and there is a high probability that the shares return to their average P/E multiple of 15X.
Purple Chips 12 -18 month target: $91.00
LOW VALUATION IN EXPRESS SCRIPTS AT $66.25 (ESRX-US) HALF POSITION
PURPLE CHIPS TARGET: $91.00 POSITION SIZE: HALF (2.5%) P/E: 12.2X DIV: NIL MKT CAP: $45B Debt: $13B RETURN ON CAPITAL: N/A EARNINGS YIELD: 7.9% 5 YR EPS Growth rate*:13.8% P/E/G Ratio: 0.88X 2016 EPS: $5.55 2017 EST.: $6.70 2018 EST.: $7.47
*Blended growth rate= 2/3 historical (5yrs), 1/3 forward.
