Related WAG Walgreens Announces Intention to List Walgreens Boots Alliance Shares on Nasdaq Following Completion of Holding Company Reorganization Walgreen To Post Q1 Ahead Of Alliance Boots Merger Making Money With Charles Payne: 10/22/14 (Fox Business) This week will be relatively quiet as the Christmas holiday will close markets on Wednesday afternoon and Thursday. The economic calendar will be the main focus as GDP figures will be released from Europe and the US. Oil prices will remain a worry as markets continue to search for the commodity’s bottom.
Without any real catalyst for demand growth, most analysts are expecting to see prices continue on their downward trajectory through the remainder of the year.
Key Earnings Reports
With the curtained week due to the Christmas holiday, next week’s earnings calendar will be thin. Walgreen Company (NYSE: WAG) will be the only major earnings release next week.
Walgreen
Walgreen is expected to report first quarter EPS of $0.75 on revenue of $19.49 billion, compared to last year’s EPS of $0.72 on revenue of $18.33 billion.
On December 10, Citi gave Walgreen a Buy rating with an $80.00 price target, cautioning that a CEO retirement may create some concern among investors:
“The company announced Mr. Wasson will retire shortly after the close of the Alliance Boots transaction (likely calendar 1Q15). Stefano Pessina, the Executive Chairman of Alliance Boots will serve as acting CEO. We view this as a positive announcement. Confidence in the management team was shaken after their downward revision of guidance in August, and news of Mr. Pessina taking on the role may relieve some investor uncertainty and concern about who will lead the strategic direction of the company.
"Importantly, we spoke with the company and they mentioned that the move was not at all prompted by financial matters or the lawsuit with the former CFO. The timing of the announcement now vs. after 12/23 earnings was to provide more transparency to shareholders ahead of the vote on 12/29. Therefore our confidence that the company will be able to achieve our FY16 estimate is unchanged, and we still view the growth story as under-appreciated. Shares are indicating up ~3% in the after-market.”
On December 10, Deutsche Bank gave Walgreen a Buy rating with a $69.00 price target, saying that the departure of the company’s CEO may be received as a positive:
“We suspect the news of Wasson's departure will be viewed as a modest positive by investors. Wasson presided over several high-profile controversies during his tenure, including the dispute with Express Scripts, the chronic underperformance of the retail business relative to CVS, and the recent miscommunication of underlying business performance as it related to the merger with AllianceBoots.
"While we do not believe that Wasson's departure is tied to another negative earnings revision, the circumstances have a timing and feel similar to the departure of former CFO Wade Miquelon prior to the August 6 preannouncement. Thus, some investor caution is warranted.”
On December 9, Mizuho downgraded its rating for Walgreen from Buy to Neutral with a $72.00 price target citing an unfavorable risk reward for the stock:
“We think the risk reward is unfavorable for WAG over the next 12 months and, as a result, are downgrading our rating from Buy to Neutral. Our Neutral rating is based on 1) limited upside to adjusted EPS, 2) sub-par organic growth in both base businesses, 3) high execution risk integrating Step 2 of Alliance Boots due to management turnover, increased international exposure and currency risk, and 4) valuation. Our new price target of $72 is based on a P/E of 16.4x applied to our FY16E adjusted EPS of $4.39E.”
Economic Releases
While next week’s economic calendar will be thin, some key reports are due out. GDP releases will be closely watched as investors look for a better picture of US and Eurozone performance in 2014.
US oil inventory data will also be in the spotlight as investors keep an eye on the growing global supply glut.
Daily Schedule
Monday
Earnings Releases Expected: Steelcase (NYSE: SCS), Bioanalytical Systems (NASDAQ: BASI) Economic Releases Expected: Italian trade balance, Greek current account, US existing home salesTuesday
Earnings Releases Expected: Walgreen (NYSE: WAG), Cal-Main Foods (NASDAQ: CALM) Economic Releases Expected: French GDP, French PPI, French consumer spending, Italian retail sales, British GDP, US GDP, US consumer sentiment, US new home salesWednesday
Earnings Releases Expected: Markets Close Early Economic Releases Expected: US oil inventory dataThursday
Markets Closed For Christmas HolidayFriday
Earnings Releases Expected : No notable earnings releases expected Economic Releases Expected: No notable economic releases expectedPosted-In: Earnings News Guidance Previews Pre-Market Outlook Markets Trading Ideas Best of Benzinga
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