Barclays Maintains an 'Overweight' on Express Scripts (ESRX); Supply Chain Exec Dismissal to Alter WAG Settlement Chances?

Barclays maintains an 'Overweight' on Express Scripts (NASDAQ: ESRX) price target of $60.00.

Barclays analyst said, "Wednesday's change in supply chain leadership at Express Scripts may somewhat alter the negotiating dynamics of the company's ongoing Walgreens (NYSE: WAG) retail network pricing dispute. Specifically, Susan Lang, SVP and Chief Supply Chain Officer at the company, considered one of the firm's 10 most senior executives and a visible representative at this fall's House Judiciary Committee's Intellectual Property, Competition, and Internet Subcommittee hearing on the proposed Express Scripts/Medco merger, is no longer with the company. Lang had been with Express since 2006 in network contracting and was promoted in 2008 to head up all pharmaceutical supplier and retail relations for the company. It appears somewhat of an abrupt change in the organization (though we could be mistaken), given that she was announced internally as being named to the Health Care Industry Council at the Federal Reserve Bank of St. Louis just last Friday. We're not aware of whether there has been an interim or permanent replacement announced at this point. Some have highlighted Lang as having been 'front and center' in the challenged relationship with Walgreens around contract pricing renegotiations this year, though certainly part of a broader team. While public commentary from both companies suggests the two are still 'far apart' in negotiations, others suggest to us some progress being made toward the December 31 deadline. We would not view her to have been involved in the disclosed WellPoint (NYSE: WLP) contractual disagreements, seeing that to have been negotiated in 2009 by the team under Keith Ebling's leadership. We continue to factor in some expected moderation in volumes for 2012 that would represent either the estimated slight loss of volumes from customers keeping Walgreens (already discussed) or some slight moderation in estimated network margins."

For an analyst ratings summary and ratings history on Express Scripts click here. For more ratings news on Express Scripts click here.

Shares of Express Scripts closed at $43.52 yesterday.

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