Walgreen's (WAG) Q110 Earnings Preview: Potential Boost from H1N1 Vaccines?

Walgreen Co. (NYSE: WAG) is trading lower today before the company reports their first quarter earnings before the market opens on Monday, December 21, 2009. Shares are down 2.46% to $37.30.

Walgreen reported an EPS of $0.47 and revs of $15.7 billion for Q409, beating both estimates as well. For Q109, Walgreen reported an EPS of $0.41 and revs of $14.9 billion, missing the estimates for both.

WAG is expected to post a Q110 EPS of $0.48 and revenues of $16.25 billion.

Shares of Walgreen are up 54% YTD, 60.2% year-through-Q110, 14.7% higher through Q110, and down 5% from the start of Q110 to the start of Q110.

Bloomberg data shows that 14 analysts have a Buy rating, 8 have a Hold, and 1 have a Sell rating on WAG. The analyst consensus price target is $43.18. The Street high price is $60, and the low is $31.

ANALYST OPINION
In September, FTN Equity initiated coverage on WAG with a Buy rating and $42 price target.

Goldman Sachs raised their price target on WAG to $36, and reiterated a Neutral rating. Goldman added $0.02 to EPS in reflection of a busier flu season. The firm said that long-term profit potential will more than offset short-term transitional costs.

Barrington Research, at the end of September, upgraded Walgreen to Outperform from Market Perform.

In October, UBS upgraded Walgreen to Buy from Neutral, and raised their price target to $46 from $32.

HIGHLIGHTS THROUGH Q110
WAG opened their 7000th store in September.

SVP of Pharmacy Innovation and Purchasing George J. Riedl announced departure in October. Riedl oversaw the rollout of a new pharmacy system in Florida and Arizona that centralizes administrative tasks and provides store pharmacists more time for patient counseling and other clinical services.

Same store sales up 5.3% in September.

WAG bought prescription files and inventory from a Nyer Medical (NASDAQ: NYSE) subsidiary. The transaction included the assignment of eight leases, for a purchase price, subject to certain adjustments, of $12.0 million plus up to $5.75 million of qualifying inventory and $1.1 million of operating equipment.

In late November, WAG announced the retirement of three long-time Board members. One was Charles R. “Cook” Walgreen III, the grandson of the company’s founder. Cordell Reed and Marilou M. von Ferstel also left.

November same store sales increased 8.7%.

Walgreen is expected to release their Q110 earnings on December 21, 2009, at approximately 8:00am EST. Stay tuned to StreetInsider.com's Earnings section to see our analysis of the highly-anticipated quarterly results within seconds of their release.

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