Leeb and Gue Go for MIM
04/18/2003 12:00 am EST
"As anyone who's bought prescription drugs knows, prices are rising. And don't forget the aging population, a powerful demographic trend for the sector. And at every age level, consumers are taking more medicine than at any time in the past. But the sector isn't without its problems. Ironically, in a period where many pundits are talking about deflation risks, health care costs are going through the roof. And while that may be a big positive for health care company earnings, it's filtering through into higher health insurance costs and raising eyebrows in Washington. The search for ways to lower costs is on and our Advantage Portfolio addition MIM Corp. (MIMS NASDAQ) stands to benefit.
"MIM distributes prescription pharmaceutical products and manages the pharmaceutical benefits programs for healthcare plan sponsors. MIM analyzes drug usage by plan participants and looks for ways to cut costs. The company also offers a prescription drug mail service for participants, allowing users to receive their scheduled medical products and prescription refills by mail. MIM also specializes in managing the healthcare needs of chronically ill patients. Treating such patients can be extraordinarily expensive, but MIM's health management programs can help to control costs in these areas while ensuring that the patients get their medications in a timely fashion. The company currently offers specially tailored programs for ailments from diabetes and multiple sclerosis to HIV. While MIM sits at the vortex of two powerful trends-burgeoning healthcare demand and rising costs- it's trading at only a small premium to its book value and less than 20 times trailing earnings. Competitors like Express Scripts and Advance PCS trade at closer to 20 times trailing earnings implying considerable upside potential for MIM. Buy below 8."