The Zacks Analyst Blog Highlights: Supervalu, Medco Health Solutions, Express Scripts, Walgreen and PACCAR

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Apr 02, 2012, 09:30 ET

CHICAGO, April 2, 2012 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Supervalu Inc. (NYSE: SVU), Medco Health Solutions (NYSE: MHS), Express Scripts Inc. (Nasdaq: ESRX), Walgreen Company (NYSE: WAG) and PACCAR Inc. (Nasdaq: PCAR).

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Here are highlights from Friday's Analyst Blog:

Medco-ESRX Deal Irks Supervalu

The leading grocery chain and heavyweight pharmacy retailer Supervalu Inc. (NYSE: SVU) is now an addition to the list of many pharmacy companies for whom the takeover of Medco Health Solutions (NYSE: MHS) by Express Scripts Inc. (Nasdaq: ESRX) did not go down well. Supervalu made its view public along with other retail giants urging the takeover would leave "only two significant competitors in a highly concentrated industry."

The National Association of Chain Drug Stores (of which Supervalu is a member), the National Community Pharmacists Association, and few retail pharmacy companies have filed a lawsuit at US District Court for the Western District of Pennsylvania appealing that the merger should be stopped.

Express Scripts wants to takeover Medco Health Solutions for $29.0 billion. The two pharmacy chains are big players in the field of Pharmacy Benefit.

Given the large purchasing power, the Pharmacy Benefit Managers (PBM) negotiate and reduce employers, government agencies and other clients' spending on prescription drugs.

If the merger takes place, St. Louis-based Express Scripts and New Jersey-based Medco would create the largest U.S. PBM, controlling prescriptions of more than one in three Americans. Thus, the pharmacy groups are worried that the merger will hurt several retail pharmacy chains, specialty chains and huge employers who need pharmacy benefits.

We note, earlier this year that another retail bigwig Walgreen Company (NYSE: WAG) had refrained from renewing its license with Express Scripts.

Therefore, customers who were registered with Express Script had to refill their prescriptions at new pharmacies or pay for them out of their own pocket.

Supervalu's Shop n Save with 50 stores in Illinois and Missouri, and 34 pharmacies planned to hire more workers and enhance its pharmacy services to welcome patients with Express Scripts prescription plans.

It has urged the Express Script customers to transfer prescriptions well ahead of time, as then the pharmacist at the Shop n Save stores can arrange for the medicines in advance.

Supervalu holds a Zacks #3 Rank that implies a short term Hold Rating.

PACCAR Launches New Trucks

With a view to improving its product lines, PACCAR Inc. (Nasdaq: PCAR) has launched high technology aerodynamic trucks at the Mid-America Trucking Show in Louisville, Kentucky. It took nearly 4 years and $400 million to launch these trucks under the Kenworth T680 and Peterbilt 579 brand names.

The trucks, powered with the company's own fuel efficient and high horse-power diesel engines, have a cab width of 2.1 meter. These trucks form part of the heavy-duty class-8 segment and are available at low price.

In the fourth quarter of 2011, PACCAR achieved a record Class 8 retail market share of 28.1% in the U.S. and Canada. Class 8 industry retail sales in the U.S. and Canada improved 56% to 197,000 units in 2011 from 126,000 in 2010.

The company reported earnings of 91 cents per share in the quarter, up from 46 cents per share in the year-ago quarter and the Zacks Consensus Estimate of 79 cents per share. Net sales and financial service revenues in the quarter surged 58% to $4.85 billion, which is the highest quarterly revenue in the company's history. It also exceeded the Zacks Consensus Estimate of $4.21 billion.

PACCAR expects the truck market to improve in 2012 driven by recovery in the housing market. With the improvement of the truck market and introduction of new vehicles, revenues are expected to reach higher levels in the coming quarters.

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