Express Scripts Not Worried About A Trump Presidency

Leerink is encouraged with comments from Express Scripts Holding Company ESRX that it's not too concerned about a Donald Trump presidency and potential repeal of ACA.

CEO Tim Wentworth said in a guidance call it's "still too early to say" but he hasn't "seen anything that causes (him) to be hugely concerned" with a Trump administration.

Trump seeks to repeal ACA and the company indicated it helps transition members from different programs all the time. The company also said it's not hearing anything negative from Washington, barring the overarching conversation about drug prices.

However, Express Scripts did state that conversations around drug prices are unlikely to "go away," and it has solutions out there that are "very workable" and the "conversation is one that we're going to be well placed in and we'll perform well in."

“In our view, ESRX seems to be well positioned to leverage its ability to drive down cost for clients and get paid for these services. However, the discussion also seemed to make it clear that ESRX does benefit from brand inflation and slower rates of price increases could be a modest headwind,” Leerink analyst David Larsen wrote in a note.

Larsen added that Express Scripts and the pharmacy benefit managers should aggressively create new products to guarantee trend and offset risk.

That said, Larsen maintained his Market Perform rating on Express Scripts shares amid investors concern about the impact of an ACA repeal, slowing generic launches and an increasingly competitive environment.

Meanwhile, Express Scripts reaffirmed its 2016 guidance of adj. EPS of $6.36-$6.42 and EBITDA of $7.230-$7.330 billion. For 2017, adjusted EPS are expected to be in the range of $6.82-$7.02 and EBITDA is estimated in the range of $7.310-$7.510 billion.