SWS Securities reiterates strong buy on Express Scripts (ESRX).
Analyst Anne Barlow says the company received a contract from the U.S. Defense Dept. that is valued at up to $275 million over five years. The contract calls for the company to supply mail order pharmacy services to Tricare, the Defense Dept.'s worldwide health care program. Barlow says Express Scripts is replacing Merck-Medco as the mail services provider for Tricare. She notes the company last month received a subpoena from the Defense Department regarding the sale of Lipitor.
Barlow says Express Scripts has since confirmed it was not the target of any investigation. She thinks this contract shows the Defense Department has no problems with the company's business practices. She maintains her $61 target based on shares trading at 20 times her $3.05 2003 earnings per share estimate.