Express Scipts - ESRX - close: 49.00 change: +0.73

Why We Like It:
Healthcare-related names have been performing well recently. While ESRX hasn't shown the same strength that the HMO healthcare index has, the overall pattern for ESRX remains bullish. The stock has been consolidating sideways the last few weeks and is starting to rebound more strongly from technical support near its 100 and 200-dma. We've seen too many watch list candidates get away from us so I'm suggesting we launch new positions now. Keep in mind this entry point is somewhat aggressive since ESRX is due to report earnings on October 27th, after the closing bell. Wall Street is looking for a profit of 65 cents a share. The earnings report could launch ESRX either direction so to limit our risk I'm suggesting we only open small positions (only half your normal trade size). We'll also use a relatively tight stop loss at $45.85.

ESRX does have some resistance near the $53-54 level but our long-term target is $59-60.

Company Info:

Express Scripts, Inc., one of the largest pharmacy benefit management companies in North America, is leading the way toward creating better health and value for patients through Consumerology®, the advanced application of the behavioral sciences to healthcare. This approach is helping millions of members realize greater healthcare outcomes and lowering cost by assisting in influencing their behavior. Headquartered in St. Louis, Express Scripts provides integrated PBM services including network-pharmacy claims processing, home delivery services, specialty benefit management, benefit-design consultation, drug-utilization review, formulary management, and medical and drug data analysis services. The company also distributes a full range of biopharmaceutical products and provides extensive cost-management and patient-care services (source: company press release or website)

I'm suggesting the 2012 and 2013 calls.

BUY the 2012 January $55 calls (ESRX1221A55) -current ask $4.85

- or -

BUY the 2013 January $55 calls (ESRX1319A55) -current ask $7.10

Chart of ESRX: