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Express Scripts (ESRX) Q4 Earnings: What's in the Cards?

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Pharmacy benefit manager, Express Scripts Holding CompanyESRX , is scheduled to report fourth-quarter 2016 results on Feb 14 after market closes.

Express Scripts Holding does not have an impressive track record of beating estimates in the four trailing quarters. In the last reported quarter, it earnings came in line with estimates, bringing the four-quarter average negative surprise to 0.04%. Over the past one year, Express Scripts Holding returned almost 1.53%, which is lower than the Zacks categorized Medical Services sub-industry's gain of roughly 10.30%.

Express Scripts Holding Company Price and EPS Surprise

Express Scripts Holding Company Price and EPS Surprise | Express Scripts Holding Company Quote

Let's see how things are shaping up prior to this quarter.

Factors at Play

For the fourth quarter, Express Scripts expects earnings per share in the range of $1.84-$1.90, while adjusted claims are anticipated to be 314-329 million. Demand for the company's services continues to be solid which should drive its sales. Management expects stronger EBITDA growth in the fourth quarter. The company also 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.

However, overall activities of Express Scripts during the fourth quarter were inadequate to win analysts' confidence. As a result, the Zacks Consensus Estimate for the quarter to be reported fell by 2 cents to $1.87 per share in the last 30 days.

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 $1.87. You can uncover the best stocks to buy or sell before they're reported with our Earnings ESP Filter .

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) going into the earnings announcement, especially when the company is seeing negative estimate revisions.

Stocks that Warrant a Look

Here are some medical stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this quarter.

Lannett Company, Inc. LCI has an Earnings ESP of +2.35% and a Zacks Rank #1. You can see the complete list of today's Zacks #1 Rank stocks here .

Summit Therapeutics Plc. SMMT has an Earnings ESP of +29.58% and a Zacks Rank #1.

UnitedHealth Group Incorporated UNH has an Earnings ESP of +0.92% and a Zacks Rank #2.

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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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