On Apr 17, we reaffirmed our long-term Neutral recommendation
) following the mixed second-quarter fiscal 2013 results. While
the last quarter results reflect a definite improvement over the
past few quarters, the Zacks Rank #3 (Hold) stock is still
plagued by challenges.
On Mar 19, Walgreens reported adjusted earnings per share of 96
cents, significantly higher than the year-ago earnings per share
of 88 cents, edging past the Zacks Consensus Estimate by a penny.
As reported earlier, total sales came in at $18.63 billion, down
0.1% year over year and trailing the Zacks Consensus Estimate of
$18.91 billion. However, the dull results can be attributed to
one extra day of the leap year in Feb 2012. Moreover, the
increasing returns of
Express Scripts Holding Company
) customers should improve sales results going forward.
Keeping perfectly in line with its strategy of long-term growth,
Walgreens inked a 10-year deal with
), effective Sep 1, 2013, to improve its global pharmaceutical
supply chain for branded as well as generic drugs. In addition to
margin expansion and bottom-line accretion, the contract between
these two stalwarts will enhance equity alignment of Walgreens,
allowing both the companies to participate in joint value
Walgreens Balance Rewards loyalty program is also gaining
traction. We also believe that investors may look forward to
rewards in the form of considerable share repurchases with
On the flip side, Walgreens' ability to win back its previous
customers remains an overhang. Integration challenges surrounding
the Alliance Boots deal is another cause of concern. The tussle
for market share with
) is another headwind. To add to the challenges, the
macroeconomic environment remains unyielding.
Thus, we prefer to remain on the sidelines for Walgreens.
However, CVS Caremark, carrying a Zacks Rank #2 (Buy) is worth
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WALGREEN CO (WAG): Free Stock Analysis Report
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