Walgreen (WAG) Comps Make Strong Gains in January; May Signal Rebound

February 5, 2013 12:24 PM EST Send to a Friend
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Walgreen (NYSE: WAG) is trading strong following January retail sales results, which were issued ahead of the bell Tuesday morning. Comps rose 3.7 percent for the month, while overall sales rose 6.3 percent.

Goldman Sachs noted that January comps beat its above-the-Street estimate calling for a 3.1 percent gain. Front-end comps fell 0.4 percent, besting Goldman's expectations of a 2 percent drop. The firm believes the better result was due in part to over-the-counter cough/cold/flu remedies.

Pharmacy comps rose 6.2 percent, versus Goldman's expectation of a 6.3 percent gain. Comparable-store prescription count, excluding the impact of flu and calendar shifts, rose 7.3 percent, versus the firms 7.0 percent outlook. The result was an "impressive acceleration" from a 1.9 percent drop in December.

Flu and flu shots are estimated to have added 4.3 points to prescriptions comps and 2.6 points to pharmacy dollars.

Overall, Goldman sees the numbers bolstering perceptions of Walgreen, particularly since getting hit in 2011 - 12. Into Walgreen's analyst meeting in February, Goldman sees the company reinforcing synergies in the Alliance-Boots acquisition, as well as the potential enhancement to Walgreen from Alliance-Boots skill sets and incremental governance.

Shares of Walgreen are up over 3 percent Tuesday. Goldman rates Walgreen at Buy with a $44 price target.

For an analyst ratings summary and ratings history on Walgreen click here. For more ratings news on Walgreen click here.

Shares of Walgreen closed at $40.01 yesterday.


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