) surged to a new 52-week high of $45.80 on Tuesday, Mar 19,
2013, following its second-quarter fiscal 2013 results. The stock
inched up 5.44% (or $2.31) to close at $44.74, reflecting a solid
year-to-date return of 21.7%.
The Stock Driver
Walgreens managed to recover from two successive challenging
quarters, which helped the company post solid earnings in the
second quarter of fiscal 2013. This better-than-expected
performance triggered the bullish momentum of the stock. As
reported earlier, Walgreens' adjusted earnings per share shot up
9.1% to 96 cents per share, beating the Zacks Consensus Estimate
by a penny.
The company gained retail prescription market share as
prescriptions filled at comparable stores during the second
quarter improved 4.3% (versus decline of 4.8% in the first
quarter). A possible explanation for this might be the new
multi-year pharmacy network agreement with
) announced in mid-Sep 2012, under which Express Scripts'
customers started filling prescriptions at Walgreens.
Another upside for Walgreens' is the 10-year deal with
), effective Sep 1, 2013, to improve its global pharmaceutical
supply chain for branded as well as generic drugs.
AmerisourceBergen will replace Walgreens' current pharmaceutical
) as the existing contract is set to expire in Aug 2013.
Following the announcement, shares of Cardinal plunged 8.19% (or
$3.78) as it is set to lose one of its largest customers. On the
contrary, AmerisourceBergen rose 3.65% (or $1.76) as its
long-term agreement with Walgreens is expected to create a
kingpin in the prescription drug purchasing space.
Walgreens is optimistic about the financial and operational
benefits from the AmerisourceBergen deal for fiscal 2014 with
margin expansion and bottom-line accretion. The company and
Alliance Boots also have the right to purchase a minority stake
(of 7%) in AmerisourceBergen, exercisable up to 23%.
Given this backdrop, things are looking good for Walgreens as its
strategic initiatives are set to revive growth. Walgreens' return
to growth, though not robust, is realistic. In light of these
facts, the estimate revision trend over the next few days is
likely to reflect bullish sentiments on the company's performance
in the ongoing fiscal. Currently, the stock carries a Zacks Rank
AMERISOURCEBRGN (ABC): Free Stock Analysis
CARDINAL HEALTH (CAH): Free Stock Analysis
EXPRESS SCRIPTS (ESRX): Free Stock Analysis
WALGREEN CO (WAG): Free Stock Analysis Report
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