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Walgreen To Post Q1 Ahead Of Alliance Boots Merger

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With Walgreen Company (NYSE: WAG) shares up nearly 17 percent in the past three months and Monaco tycoon Stefano Pessina about to take the helm as acting chief executive, an analyst called its long-term potential compelling.

Walgreen is set to post fiscal first-quarter results December 23, while shareholders are slated to vote on its full acquisition of Swiss-based pharmacy retailer and wholesaler Alliance Boots the following week.

"The key focus will be on Pessina's roadmap for the company under his leadership," Morgan Stanley's Ricky R. Goldwasser said in a note Friday maintaining an Overweight rating and $77 target.

Walgreen changed hands recently at $73.58, down 1 percent.

Gregory D. Wasson, 55, announced his retirement last week and will be replaced as CEO on an acting basis by 8 percent stake holder Pessina, described by Bloomberg as the richest person in Monaco, with a fortune of $11.2 billion.

Wasson, who will reap a retirement package worth $35.1 million according to Crain's Chicago Business, departs following mounting pressure from shareholders to bring in a new team, according to an analysis by Barclays analyst Meredith Adler published in June.

"A favored option is to put Alliance Boots management in charge of the joint company," Adler wrote.

Walgreen has already disclosed that its first-quarter sales for the period ended November 30 grew 6.9 percent to $19.5 billion, with same-store sales up 5.8 percent. Front-end same-store sales increased 1.5 percent on heavy promotions, while traffic fell 2.6 percent.

Goldwasser said that over the past couple of years, if Walgreen shares were falling in the month leading up to an earnings announcement, they've have tended to rise on the news. If shares were rising leading up to the report, they've tended to fall following its release.

During the past month Walgreen is up more than 8 percent and Goldwasser said possible weakness following Tuesday's upcoming report is "a buying opportunity."

Latest Ratings for WAG

Dec 2014JP MorganMaintainsOverweight
Dec 2014BarclaysMaintainsEqual-Weight
Dec 2014SunTrust Robinson HumphreyDowngradesBuyNeutral

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Posted-In: Morgan Stanley Ricky R. GoldwasserAnalyst Color Reiteration Management Analyst Ratings


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