Express Scripts Sees Things Picking Back Up Dave Marino-Nachison (TMF Braden)
November 1, 1999
Shares of pharmacy benefit management (PBM) company Express Scripts Inc. (Nasdaq: ESRX) rose more than 10% today after it set forth an encouraging earnings outlook heading into the next century.
"Our outlook moving forward is very positive," said President and CEO Barrett Toan in a press release. "We believe we will continue to post strong earnings growth in 1999 and 2000 in line with our historical earnings growth rate. We know of no material issues that would change that outlook at this time." Over the last five full years, Express Scripts' net income has risen more than 27% annually on a compounded basis.
"Further," Toan said, "recent actions by the company have allowed Express Scripts the flexibility both to meet these expectations and to make additional investments to sustain our growth beyond 2000."
Toan and Express Scripts presumably felt it was necessary to get investors on their side after the shares nose-dived last week. The stock tumbled after a report from the Center for Financial Research and Analysis (CFRA), a watchdog group, criticizing various aspects of the company's growth, business, and accounting made the Wall Street rounds.
The company quickly responded point-by-point (go here, then click on the "Facts Counter CFRA Report Issues" link), but investors apparently needed a bit more nudging to get back into the fold.
Some of that came in the days following the CFRA report, during which several of the brokerages covering the company reiterated upbeat ratings on the stock.
The story behind Wall Street's reaffirmed affirmation generally followed the same tack as that of Express Scripts itself, saying the underlying fundamentals of the business are still strong.
That appears the case given the company's third-quarter earnings, released Oct. 20, which boasted strong growth numbers for the three and nine months, and expressed optimism about the integration of recent acquisitions and the development of the company's online operation (examined at greater length in a March Fool Plate Special).
Investors certainly got hurt as a result of the CFRA report, but if the company delivers as it claims it can, anyone with a long-term horizon and a belief in the long-term viability of the company's business plan should forget about last week in time.
While sudden and unexpected blips in a stock's performance can certainly be upsetting, they can also serve as reminders that investors should know why they are invested in the companies they own by reaffirming the research that got them into the stock in the first place.
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