Market Overview

Baird Downgrades Express Scripts On Industry Instability

Baird Downgrades Express Scripts On Industry Instability

Regulatory uncertainty is rising too high for Baird Equity Research to remain bullish on Express Scripts Holding Co (NASDAQ: ESRX).

The Rating

Analyst Eric Coldwell downgraded Express Scripts to Neutral with an $81 price target.

The Thesis

Previously, Express Scripts’ improving new business trends, its consistency in core profit and loss statements and a better sentiment for pharmacy benefits managers (PBMs) made for an attractive near-term risk-reward profile.

Now, however, Coldwell considers upside dependent on a successful sale to CIGNA Corporation (NYSE: CI). The deal is seen to have favorable odds, but the risk of downside has “significantly increased.”

“PBMs have been under heavy political attack in recent weeks and the stand-alone trajectory is almost impossible to model right now,” Coldwell wrote in a note.

The risk is primarily in recent advancement of plans for rebate-model reform.

“[It] could be material to ESRX profit model and makes long-term stand-alone modeling almost impossible right now,” Coldwell wrote.

Price Action

At time of publication, shares were trading up marginally around $77.

Related Links:

CVS: An Interesting Trade On The Cigna-Express Scripts Deal

Predicted Gross Margin Pressure, EPS Erosion Turn Bernstein Bearish On Express Scripts

Latest Ratings for ESRX

Nov 2018MaintainsMarket PerformMarket Perform
Nov 2018MaintainsEqual-WeightEqual-Weight
Sep 2018DowngradesOutperformNeutral

View More Analyst Ratings for ESRX
View the Latest Analyst Ratings

Posted-In: Baird Equity Research Eric ColdwellAnalyst Color Downgrades Analyst Ratings Best of Benzinga


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