Skip to Content
Stock Analyst Update

Positive News All Around for Express Scripts

The wide-moat pharmacy benefits manager is in a solid long-term position given its cost-saving and efficiency services.


There wasn’t much to complain about in  Express Scripts(ESRX) fourth quarter, as the pharmacy benefit manager reported positive metrics all around. We believe the firm is in a solid long-term position given its cost-saving and efficiency services, and this dynamic was reflected in its results. Express reported a solid gain for both its top and bottom line, and critically, reported impressive results on a per-claim basis. Revenue, gross profit, and operating profit per claim increased 2%, 6%, and 7%, respectively. Adding to the positive news was management’s outlook for 2018 client retention of 96%-98%. This outlook was boosted by a strong selling season. From our perspective, this points to a healthy operating environment for Express and falls in line with our investment thesis for the PBM. Accordingly, we are reiterating our wide moat rating and $89 fair value estimate.

Morningstar Premium Members gain exclusive access to our full analyst reports, including fair value estimates, bull and bear breakdowns, and risk analyses. Not a Premium Member? Get this and other reports immediately when you try Morningstar Premium free for 14 days.

Vishnu Lekraj does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.