Express Scripts Shares Surged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of pharmacy-benefit manager Express Scripts (NAS: ESRX) climbed 10% on Thursday after cutting its profit forecast less than expected.

So what: The shares have taken a beating on cost concerns associated with its proposed $29 billion buyout of rival MedcoHealth Solutions (NYS: MHS) , but the full-year cut -- Express Scripts now expects adjusted earnings of $2.95-$3.05 per share, versus its prior forecast of $3.15-$3.25 -- isn't nearly as bad as investors had feared. Of course, the stock is still off more than 30% since announcing the deal in late July, so Mr. Market hasn't exactly applauded the move just yet.

Now what: Express Scripts remains a pretty attractive long-term opportunity. "In spite of near-term headwinds and a challenging macroeconomic environment," said Chairman and CEO George Paz, "we remain confident we are well-positioned for continued growth." In fact, the company's fiscal forecasts through 2014 -- disclosed in a securities filing on the merger -- were also much higher than analysts had expected, offering investors even more comfort regarding the Medco buy.

Interested in more info onExpress Scripts?Add it to your watchlist.

At the time thisarticle was published Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Motley Fool newsletter services have recommended buying shares of Medco. Try any of our Foolish newsletter services free for 30 days.We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool's disclosure policy always gets a perfect score.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.