UPDATE 2-Express Scripts 2nd qtr profit up but shares fall

* Q2 adjusted EPS $0.60 vs Street view $0.59

* Revenue $11.28 billion

* Sees 2010 adjusted EPS $2.45-$2.50

* Shares fall 3.2 percent (Adds analyst comment, NetRx, generic details)

By Bill Berkrot

NEW YORK, July 28 (Reuters) - Pharmacy benefit manager Express Scripts Inc (ESRX.O) on Wednesday reported that second-quarter profit rose 60 percent, but the company raised only the low end of its full-year earnings forecast and its shares fell more than 3 percent.

Express said it now expects full-year adjusted earnings of $2.45 to $2.50 per share, excluding items. It had previously forecast $2.42 to $2.50 per share.

"A lot of people, including myself, were probably looking for them to raise guidance since they've been buying back stock," said Gabelli & Co analyst Jeff Jonas, who added that Wall Street was already looking for Express to hit the high end of its forecast range.

Express posted a net profit from continuing operations of $307.3 million, or 56 cents per share, compared with a profit of $192.3 million, or 37 cents per share, a year ago.

Excluding items, the St. Louis-based company had adjusted earnings of 60 cents per share, topping analysts' average expectations by a penny, according to Thomson Reuters I/B/E/S.

The company said it has now migrated more than 50 percent of the NetRx membership to its systems and still expects the acquisition to generate more than $1 billion in annual earnings once fully integrated.

Express last year purchased WellPoint Inc's (WLP.N) NetRx PBM business for $4.68 billion. Pharmacy benefit managers, or PBMs, administer drug benefits for employers and health plans and also operate mail-order pharmacies.

Revenue for the quarter rose to $11.28 billion, shy of Wall Street estimates of $11.35 billion.

But use of lower cost generic drugs, which carry a higher profit margin than expensive branded medicines, rose to 72.5 percent from 69.2 percent a year ago, and from 70.2 percent in the previous quarter.

Claims volume for the quarter rose to 151 million from 94.7 million a year ago.

Arthur Henderson, an analyst for Jefferies and Co, said both the quarter and the company's fundamentals were very strong and he does not expect the stock sell-off to last.

"What I thought was particularly compelling is they beat on all metrics," he said, noting that gross margins and cash flow were especially strong.

The Express second-quarter results look to be much stronger than those reported by rival PBMs Medco Health Solutions IncMHS.N and CVS Caremark(CVS.N), Henderson said.

Express shares fell 3.2 percent to $40.85 in extended trade from their Nasdaq close at $42.20.

"It's hard to believe that this will be where the stock will trade at the open tomorrow," Henderson said. (Reporting by Bill Berkrot, editing by Bernard Orr)