Walgreen (WAG) has dropped 1.2% today after missing earnings forecasts and removing its guidance. Analysts, however, think Walgreen has caught a cold–not a more serious illness.
AP Earlier today, Walgreen reported fiscal third quarter earnings of $722 million, or 75 cents a share, up from $624 million and 65 cents a share a year prior. Excluding items, Walgreen reported a profit of 91 cents a share, missing forecasts for 94 cents. Quarterly net sales were $19.40 billion, up from $18.31 billion a year prior, missing forecasts for $19.48 billion.
WSJ's Anna Prior notes that Walgreen also removed its 2016 guidance while it restructures a few things, including flirting with the idea of a move to buy up even more Alliance Boots to satisfy shareholder demand.
With all this going on, we wondered what analysts thought about Walgreen today. Two weighed in bullishly.
Ann Hynes of Mizuho writes: "Our proforma estimates are currently under review. But we expect little change to our $4.85 proforma fiscal 2016 EPS estimate given our operating profit goals of $8.7 billion were already below the expected $9.0-9.5 billion range and should easily be offset by higher synergies, coupled with the potential for the deal to be structured as a tax inversion and lower debt costs. We view the fact that Walgreen's intends to disclose its plans with the second step of the Alliance Boots transaction on an earlier timetable as positive and sends a signal the board is listening to shareholders."
David Larsen of Leerink agrees: "We still remain positive on Walgreen's, despite near-term margin pressure. We believe that Alliance Boots and AmerisourceBergen synergies are tracking slightly ahead of plan, there will be a long-term benefit from Affordable Care Act volumes and specialty, and we are positive on management’s ability to work through near-term reimbursement challenges."
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