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Express Scripts (ESRX) Q3 Earnings: What's in the Cards?
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Pharmacy benefit manager (PBM) Express Scripts Holding Company is scheduled to report second-quarter 2016 results on Oct 25 after the market closes. Last quarter, the company has posted earnings in line with estimates.
In the four trailing quarters, Express Scripts has delivered positive earnings surprises twice, bringing the average positive earnings surprise to 0.13%.
Let’s see how things are shaping up for this quarter.
For the third quarter, Express Scripts expects earnings per share in the range of $1.72–$1.76, while adjusted claims are anticipated to be 311–321 million. Demand for the company’s services continues to be solid which should drive its sales. At the second-quarter conference call, management revealed expectations stronger EBITDA growth in the third and fourth quarter. The company anticipates operational cost improvements with focus on technology, digital tools, home delivery and specialty.
We expect Express Scripts to continue benefitting from increased generic utilization, shift toward mail orders, strong specialty growth and an aging population. Branded drugs are becoming increasingly expensive due to double-digit brand inflation, continued rise in the price of specialty drugs and overwhelming regulatory burden pushing demand for generics. Hence, clients need innovative solutions to counter this trend.
Earnings Whispers
Our proven model does not conclusively show that Express Scripts is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Express Scripts is 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.74.
Though a favorable Zacks Rank increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult. Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Cancer Genetics, Inc. has an Earnings ESP of +7.14% and a Zacks Rank #2. The company is scheduled to report second-quarter results on Nov 8.
The Earnings ESP for Premier, Inc. (PINC - Free Report) is +5.41% and it carries a Zacks Rank #2. The company is expected to release results on Nov 14.
ImmunoGen, Inc. has an Earnings ESP of +5.41% and a Zacks Rank #3. The company is scheduled to report second-quarter results on Oct 28.
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Express Scripts (ESRX) Q3 Earnings: What's in the Cards?
Pharmacy benefit manager (PBM) Express Scripts Holding Company is scheduled to report second-quarter 2016 results on Oct 25 after the market closes. Last quarter, the company has posted earnings in line with estimates.
In the four trailing quarters, Express Scripts has delivered positive earnings surprises twice, bringing the average positive earnings surprise to 0.13%.
Let’s see how things are shaping up for this quarter.
EXPRESS SCRIPTS Price and EPS Surprise
EXPRESS SCRIPTS Price and EPS Surprise | EXPRESS SCRIPTS Quote
Factors at Play
For the third quarter, Express Scripts expects earnings per share in the range of $1.72–$1.76, while adjusted claims are anticipated to be 311–321 million. Demand for the company’s services continues to be solid which should drive its sales. At the second-quarter conference call, management revealed expectations stronger EBITDA growth in the third and fourth quarter. The company anticipates operational cost improvements with focus on technology, digital tools, home delivery and specialty.
We expect Express Scripts to continue benefitting from increased generic utilization, shift toward mail orders, strong specialty growth and an aging population. Branded drugs are becoming increasingly expensive due to double-digit brand inflation, continued rise in the price of specialty drugs and overwhelming regulatory burden pushing demand for generics. Hence, clients need innovative solutions to counter this trend.
Earnings Whispers
Our proven model does not conclusively show that Express Scripts is likely to beat earnings this quarter. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) to be able to beat estimates. This is not the case here, as you will see below.
Zacks ESP: The Earnings ESP for Express Scripts is 0.00%, as both the Most Accurate estimate and the Zacks Consensus Estimate are pegged at $1.74.
Zacks Rank: Express Scripts currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Though a favorable Zacks Rank increases the predictive power of ESP, the company’s 0.00% ESP makes surprise prediction difficult. Meanwhile, we caution against stocks with a Zacks Rank #4 or 5 (Sell-rated stocks) going into the earnings announcement, especially when the company is seeing negative estimate revisions.
Stocks That Warrant a Look
Here are some health care stocks that you may want to consider, as our model shows that they have the right combination of elements to post an earnings beat this quarter.
Cancer Genetics, Inc. has an Earnings ESP of +7.14% and a Zacks Rank #2. The company is scheduled to report second-quarter results on Nov 8.
The Earnings ESP for Premier, Inc. (PINC - Free Report) is +5.41% and it carries a Zacks Rank #2. The company is expected to release results on Nov 14.
ImmunoGen, Inc. has an Earnings ESP of +5.41% and a Zacks Rank #3. The company is scheduled to report second-quarter results on Oct 28.
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>