It could be time to buy the dip in this PBM.
NEW DIRECTIONAL CALL PLAYS
Express Scripts - ESRX - close: 51.41 change: +0.69
Stop Loss: 49.65
Current Option Gain/Loss: + 0.0%
Time Frame: 5 to 6 weeks
New Positions: Yes
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 ConsumerologyÂ®, 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)
Why We Like It:
We want to buy the dip in ESRX. The correction has been on light volume and shares still look bullish following the early November breakout over resistance. The $50.00 level should be support. I am suggesting we buy half of our position now at current levels. Then if we see another dip near $50.50 we can buy our second half. We'll use a stop loss at $49.65. Our first target is $53.95. FYI: The Point & Figure chart is pretty bullish with a $74 target.
Suggested Position: Buy the 2010 December $52.50 calls (ESRX1122A52.5) current ask $1.94
Entry on November 18th at $ xx.xx
Earnings Date 02/24/11
Average Daily Volume = 4.3 million
Listed on November 17th, 2010