UBS Maintains a 'Buy' on Walgreen (WAG); Lowering EPS Estimates; Still Assume ESRX Resolution in Published Estimates

UBS maintains a 'Buy' on Walgreen (NYSE: WAG) price target cut from $51 to $45.

UBS analyst says, "As expected, WAG’s September same-store sales of 3.1% were slightly below the recent trend line of 4.0-4.5%, due primarily to a slower start to the flu season this year versus last year (WAG mgmt mentioned -15% flu trend y-o-y on its conf call last week). Overall, the monthly comps are still taking a back seat as the ESRX saga remains the biggest source of EPS risk. Unfortunately, our discussions with WAG mgmt provided no update on ongoing arbitration process in IL w/Express Scripps (Nasdaq: ESRX)."

"We are lowering F2012 EPS from $3.08 to $3.02. The projection still assumes resolution with ESRX. We still see potential for further ~$0.75 annualized EPS
downside if contract remains unresolved with both ESRX/MHS, due to our belief that WAG’s business ‘recapture’ rate may be thin." (UBS lowers FY13 EPS estimate from $3.53 to $3.37)

For more ratings news on Walgreen click here and for the rating history of Walgreen click here.

Shares of Walgreen closed at $33.03 yesterday.

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