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TTD's Quality Rating of Stock - ESRX - ABOVE AVERAGE |
Ticker Tape Digest, January 2010 - ESRX, based in St. Louis, is a pharmacy benefit management company. Annual
revenues: $22.1 billion. ESRX's stock breaks out from a 6-week flat base today
and makes a new all-time high. It is one of the few stocks to reach an all-time
high following the recent bear market. ESRX is trading 2.4 million shares so far
today. The stock's average daily volume is 2.6 million shares. 
ESRX's 5-minute chart shows the stock breaking out in the mid-morning. Volume picked up intraday at the time of the breakout.
The stock held its breakout nicely in the afternoon. The action was very good considering the stock market was mixed.
ESRX's tape action shows the recent big block trades. One can see the price for the blocks climbing from $88.02 on Thursday to a peak of $91.39 Friday.
A key trade came when a block of 11,100 shares crossed at $90.71. That was
up sharply from the prior block trade at $88.72. The tape action indicated
aggressive institutional buying in the morning. 
The Company provides services to health maintenance organizations (HMOs), health insurers, third-party administrators, employers, union-sponsored benefit plans, workers’ compensation plans and government health programs.
ESRX operates in two areas: Pharmacy Benefit Management Services and Specialty and Ancillary Services.
Its PBM services include retail network pharmacy management; retail drug card programs; home delivery pharmacy services; benefit design consultation and compliance and therapy management programs.
ESRX's 12-month performance chart shows the stock appreciating 65% versus a 25% gain for the S&P 500 index. That is a good performance for a big cap issue.
ESRX's long-term chart shows the stock rallying back strong after the
recent bear market. A stock with strong earnings that makes it back to a new
high before most other stocks is termed a leader. That is what ESRX is so far in
this market. Since 2004 the stock has quadrupled. 
ESRX's daily chart shows the stock moving higher and holding nicely over its rising 50-day moving average line. That technical pattern is very impressive.
The breakout shows a nice widening of the spread. (range from high to low)
The TTD momentum indicator (top of chart) is slightly bullish.
The accumulation - distribution line has been slightly weak in recent weeks. It will be important to see that indicator come back to life.
ESRX is poised to show a big pickup in earnings for 2010.
The Street currently expects ESRX's net for 2009 will increase 12% to $3.46 a share from $3.10 in 2008. Looking ahead to 2010, net is projected to leap 35% to $4.67 a share. That is an acceleration in annual earnings growth. That is impressive.
The stock sells with a price-earnings ratio of 19 based on 2010 net. TTD sees that as reasonable.
Net for the upcoming fourth quarter should rise a modest 8% to 89 cents a share from 83 cents a year ago. The highest estimate is at 94 cents a share. ESRX tends to come in close to the consensus. TTD does not expect any surprises.
Profit growth in the first quarter will show an acceleration. Net is expected to rise 22% to $1.05 a share from 86 cents a year ago.
Strategy Opinion: TTD is very bullish on ESRX. It has the look of a steady climber that is part of a strong industry sector. TTD is targeting ESRX for a move to 110 within the next few months. A protective stop can be placed near 87. TTD rates ESRX a very good intermediate-term play, especially for conservative investors.
Sponsorship: Very Good. The largest fund holder is Davis NY Venture Fund, 3-star rated, with a 2.2% stake. A key buyer recently was Fidelity Contrafund, 5-star rated, which purchased 75,000 shares. ESRX has 274 million shares outstanding.
Insider Activity: Neutral. Some light buying, no selling. Right now, 30 analysts follow the stock, 25 have a buy, up from 21 three months ago.
Stock Performance Chart for 12 months with Quarterly Earnings Markers.
