Story updated at 9:55 a.m. to reflect market activity.
Express Scripts gained 0.4% to $66.60 in morning trading.
The analyst firm reiterated its "buy" rating for the company. Express Scripts' lack major mail order generic launches and generic inflation headwinds "may have served as negative offsets" according to UBS analyst Steven Valiquette.
"These may have prompted some PBMs such as ESRX to exercise 'MAC' clauses with retailer dispensers in an effort to lower COGS during 2Q," Valiquette wrote. "Separately, there has been much discussion about recent insider selling at ESRX. We believe if there is any negative signal here, it would have more to do with 2015 than 2014 given the selling season trends. Further, ESRX has already lowered 2014 guidance, and would not seem operationally to need to do it again (unless somehow buybacks are not achieved)."
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Separately, TheStreet Ratings team rates EXPRESS SCRIPTS HOLDING CO as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate EXPRESS SCRIPTS HOLDING CO (ESRX) a BUY. This is driven by a number of strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and notable return on equity. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- EXPRESS SCRIPTS HOLDING CO's earnings per share declined by 6.7% in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, EXPRESS SCRIPTS HOLDING CO increased its bottom line by earning $2.31 versus $1.85 in the prior year. This year, the market expects an improvement in earnings ($4.87 versus $2.31).
- The debt-to-equity ratio is somewhat low, currently at 0.63, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.43 is very weak and demonstrates a lack of ability to pay short-term obligations.
- ESRX, with its decline in revenue, underperformed when compared the industry average of 16.0%. Since the same quarter one year prior, revenues slightly dropped by 9.0%. The declining revenue appears to have seeped down to the company's bottom line, decreasing earnings per share.
- The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. When compared to other companies in the Health Care Providers & Services industry and the overall market, EXPRESS SCRIPTS HOLDING CO's return on equity is below that of both the industry average and the S&P 500.
- The gross profit margin for EXPRESS SCRIPTS HOLDING CO is currently extremely low, coming in at 7.97%. Regardless of ESRX's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 1.38% trails the industry average.
- You can view the full analysis from the report here: ESRX Ratings Report
Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.