JP Morgan Remains "Neutral" on Walgreen Company (WAG)

JP Morgan Remains “Neutral” on Walgreen Company (WAG)


Following the earnings report reported by the Walgreen Company (WAG) on Friday, analysts at JP Morgan reiterated a “Neutral” position on the drugstore chain.

The analysts remained “Neutral” on WAG and see shares reaching $41, a +12.4% upside to Monday’s closing price of $36.47.

An analyst at JP Morgan noted, “This morning WAG reported fiscal 1Q13 results. Adjusted EPS was $0.58, although adding back a $0.10 EPS swing related to a change in accounting for Alliance Boots equity income (moving from a 1-month reporting lag to a 1-quarter lag), adjusted EPS would have been $0.68. This compares to our $0.73 estimate and Bloomberg consensus of $0.70. We maintain our Neutral rating on the WAG shares. While the ESRX agreement removed an overhang and comps will get easier in CY13, we remain cautious based on the risks around script recapture, reimbursement pressure (especially as the generics tailwind lessens over the next several quarters) and macro risk in Europe potentially impacting Alliance Boots.”

Walgreens shares were down 7 cents, or -0.19%, in premarket trading on Monday. The stock is up +10.31% year-to-date.

The Bottom Line
Shares of Walgreen Company (WAG) have a 3.02% dividend yield, based on Monday’s closing stock price of $36.47. The stock has technical support in the $33-$34 price area. If the shares can firm up, we see overhead resistance around the $38-$40 price levels.

Walgreen Company (WAG) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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