Morgan Stanley Reports on Medco Health

Morgan Stanley commented on Medco Health MHS in a report released today. In the report, Morgan Stanley was positive in its assessment of the company. Morgan Stanley writes, "E-prescribing adoption to drive gross margin expansion. E-prescribing has reached an inflection point with adoption accelerating year-to-date. MHS sees this trend as an important cost savings opportunity, quantified at ~$2 per new script. Physician adherence to formulary guidelines via the mail channel can drive up to an additional $4 in savings. Changes to “Buy & Bill” model could drive specialty share gains for PBMs. MHS is focused on penetrating specialty spend currently managed by MCOs, by leveraging its existing infrastructure. For this opportunity to materialize fully, physician incentives, especially for oncology practices, need to change, a process MHS predicts will happen over the next 3 to 5 years." Morgan Stanley currently has an Overweight rating on Medco Health. Shares of Medco Health closed yesterday at $63.66, down from $64.19 at the opening bell.