Express Scripts' sell-off may be overdone: Barron's

Sun Nov 25, 2012 5:36pm EST

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(Reuters) - The recent sell-off of Express Scripts Holding (ESRX.O) may be overdone, and the stock could rise 10 percent to 15 percent in the next 12 months, business weekly Barron's said on Sunday.

Shares of the St. Louis-based pharmacy benefits manager closed on Friday at $52.24, down about 21 percent from its high for the year in early October.

Barron's said the slide in the stock's price began on November 5 following a strong third-quarter earnings report and a slight increase in its 2012 guidance. On the related conference call, the company's CEO said analysts' estimates were too high, citing the weak economy. Some analysts downgraded the stock, and some investors bailed out.

"Express Scripts' sell-off has rendered its valuation cheap," the newspaper said.

The price/earnings ratio, now 12 times consensus earnings projections, as well as its enterprise value (net debt plus market value), were both well below median levels, Barron's said.

The company's big opportunity going forward is in generic drugs - particularly mail-order generic drugs, given that branded drugs with annual aggregate sales of about $30 billion are going off patent between now and 2015, Barron's said.

(Reporting b John McCrank in New York; Editing by Jan Paschal)

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