Earnings Preview: Medco Health Solutions

Medco Health Solutions (MHS) is expected to report Q2 earnings with conference call scheduled for 8:30 am ET.

Guidance

Analysts are expecting a profit of 54c on revenue of $12.59B. The consensus range for EPS is 52c to 58c, with a revenue range of $12.08B to $13.08B, according to First Call.

Analyst Views

Positives for this earnings period include the acquisition of PolyMedica and the momentum of a strong sales year in FY07. The slew of generics that are coming to market with brand name patent expirations is positive for the company's potential revenue. The company's contacts with large accounts like UnitedHealth Group (UNH) and Coventry Health Care (CVH) enable some positive earnings visibility. Possible negative drivers include revenue erosion from a very competitive market.

On July 7, JMP Securities noted that it would be a buyer ahead of Q2 results. JMP Securities expects continued sales momentum throughout 2008 and believes MHS is its most attractive healthcare services idea following the recent share weakness. The firm rates the shares Outperform.