DB Maintain a Buy Rating on Express Scripts
Tuesday, October 18, 2021 9:58 AM



Analysts at Deutsche Bank give a buy rating on the shares of Express Scripts Inc. (Nasdaq: ESRX), a pharmacy benefit management company, with a price target of $52 per share. The buy rating is based on the proposed deal between Express Scripts and MedcoHealth Solutions Inc (NYSE: MHS), a clinically driven pharmacy services company. The deal is worth $29 billion. Medico shareholders will receive a 28 percent premium to its pre-deal price, and the company’s shareholders will hold 41 percent of the new company

 

The proposed deal would create rare two-for-one synergies and buying power where the merged entity would be both low-price leader on one hand and can significantly improve margins on other hand. Another factor is that the new health care bill will add more than 1 million new Americans to insurance coverage thus increasing demand.

 

Out of various points that analysts at DB considered, the one major point is how the Federal Trade Commission will respond. The deal will make an entity that controls more then 32 percent of the PBS market. Analysts believe there is a 75 percent chances for the deal to pass given historical precedence and a view the deal is beneficial to customers. Analysts maintain a Buy rating on  Express Scripts while maintaining a Hold rating on MHS scripts.     


 

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