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Friday, October 31, 2008

Afternoon Review

Express Scripts (ESRX) +5.28%
After yesterday’s closing bell, ESRX reported earnings guidance that surpassed analyst expectations and raised guidance for 2008. ESRX is not very economically sensitive, as pharmaceutical demand (especially generics) tends to hold up in any environment. Increasing their generic utilization rate to 66.2 percent from 62.2 percent last year led to operating margin improvement of 110 basis points.

ESRX’s 2009 outlook is higher than Bloomberg’s average estimates. The company expects economically stressed consumers to switch to generic drugs or mail-order pharmacies to save money, both of which generate higher margins for the company. Both presidential candidates have supported greater use of generic drugs to help lower healthcare costs in the U.S.

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Chevron (CVX) +0.57%
CVX, the second-largest U.S. oil company, said 3Q profit doubled.
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JPMorgan Chase & Co (JPM) +9.65%
JPM said it will modify terms on the $110 billion of mortgages and delay foreclosures (see story here). None of its customers will face foreclosure in the next 90 days while it finds ways to make payments easier. JPM also said it issued $25 billion of preferred stock and warrants to the U.S. Treasury as part of the government’s plan to shore up lenders and thaw credit markets.
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Recently, the market has been making big moves (both up and down) in the last 30 minutes of trading. WSJ.com blog MarketBeat tries to provide some logic to the late-day insanity.

Happy Halloween!!!

Peter Lazaroff, Junior Analyst

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