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Express Scripts (ESRX) Earnings Top, Revenues Lag in Q4

St. Louis, MO-based pharmacy benefit manager Express Scripts Holding CompanyESRX posted fourth-quarter 2016 adjusted earnings per share of $1.88, beating the Zacks Consensus Estimate by a penny. Furthermore, adjusted earnings jumped 20.5% from the year-ago quarter.

Revenues of $24.8 billion missed the Zacks Consensus Estimate of $26.2 billion and were down 5% on a year-over-year basis.

For the full year, Express Scripts reported revenues of $100.3 billion, down from the year-ago figure of $101.7 billion.

Express Scripts Holding Company - Earnings Surprise | FindTheBest

Stock Performance

The price performance of the stock has been unfavorable over the last three months.

Express Scripts registered a negative return of 10.6%, wider than the Zacks classified Medical Services sub-industry's decline of almost 2.7%. In fact, the current level is also lower than the S&P 500's solid return of around 6% over the same time frame.

Despite the bearish price trend, a long-term expected earnings growth rate of 11.8% instills our confidence in the stock. Currently, Express Scripts has a Zacks Rank #2 (Buy).

Quarterly Highlights

Adjusted gross profit in the fourth quarter was up 3.3% to $2.3 billion. Adjusted selling, general and administrative expenses were $863.5 million, down 17.7%.

Total adjusted claims amounted to $354.9 million, down 6% year over year due to faster roll-off of the Coventry business.

During the quarter, the company repurchased a total 74.4 million shares under its repurchase program of $5.57 billion during 2016.

Guidance

For the full year, Express Scripts reaffirmed its adjusted earnings per share guidance in the band of $6.82 to $7.02. Notably, this represents growth of 8% at the mid-point of the range on a year-over-year basis.

For the first quarter of 2017, adjusted earnings are estimated in the range of $1.30 to $1.34 per share, representing growth of 7% to 10% on a year-over-year basis. Adjusted claims for the first quarter are projected between $345 million and $355 million.

Stocks to Consider

Better-ranked stocks in the broader medical sector include Glaukos Corporation GKOS , Avinger, Inc. AVGR and Fluidigm Corporation FLDM . Notably, Glaukos Corporation and Fluidigm sport a Zacks Rank #1 (Strong Buy), while Avinger has a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Glaukos Corporation has a long-term expected earnings growth rate of approximately 25%. Notably, the stock represents an impressive one-year return of 197%.

Fluidigm Corporation has a long-term expected earnings growth rate of 25%. The stock has added 11.4% over the last three months.

Avinger projects sales growth of 2.3% for the current year. Additionally, the company posted a positive earnings surprise of 27% in the last quarter.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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