Financial Trading Blog
Stock of the day 19/12/2014 - Walgreen Co
These events will factor into the company’s Q1 2015 earnings release next Tuesday.
The largest drug retailing chain in the USA opened its 2014 at $56.64, reaching its yearly high at $76.30 in June. However, the announcement of a merger with the UK’s largest drug store Alliance Boots (of Boots fame) led stocks to fall by an accumulative 18% to $58.32. However, following this precipitous drop the company’s shares rallied, managing to reach $75 by mid-December.
Walgreens had a very successful fiscal 2014, with sales of $76 billion; September saw the company’s last earnings release, with $0.74 earnings per share and $19.10 billion in revenue, up 6.2% year on year. Next Tuesday’s release is forecast to bring in similar figures, with an estimated $0.75 EPS this quarter, with revenue of $19.48 billion.
Alongside the aforementioned merger with Alliance Boots, 2014 saw the announced retirement of Walgreens' CEO Greg Wasson. Share prices rose after the reveal of his departure; not the greatest parting gift for Wasson, who was initially meant to head up the merger. By joining with Alliance Boots, Walgreens will enter into the European market, as well as stretching its limbs to China. This latter factor is due to Alliance Boots’ joint venture with Guangzhou Pharmaceuticals Corp from 2008.
Following this news-filled year for Walgreens, a poll of eleven analysts has a consensus rating of ‘hold’ on the stock, with 2 rating the company ‘buy’, and the other 9 ‘hold’. Walgreens will be looking to 2015 as a year of great expansion, as it attempts to go global. This could cause the New Year to be a transitional period for the company as it may have to ride out new-market wobbles in an unstable Europe. It was this uncertainty that spooked investors back in August, and it may be this uncertainty that informs investors’ reactions to the earnings release next week.
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