Walgreen Co. Message Board

Walgreen’s health may not be completely restored by its new deal with Express Scripts. Too much damage has already been done.

Citi’s Deborah Weinswig maintained her Sell rating on Walgreen today. She sees Walgreen needing to use aggressive discounts to win customers back. And it’s not likely to be a quick fix.




“This dispute also highlights the viability of narrow networks, and we are not convinced that Express Scripts clients will rush to have Walgreen back int he network,” she says. She expects sales at established Walgreen locations to underperform expectations.

Shares of Walgreen fell 0.7% to $34.38 today, a day after the deal’s announcement buoyed the stock 12%.

Weinswig raised her 2013 earnings estimate on Walgreen to $3.05 a share from $2.92 a share. She forecasts Walgreen taking back 40% of the prescription sales it lost, boosting those sales by 4.1%.

In turn, she lowered her earnings estimate for CVS, to $3.45 a share from $3.50, and cut the price target to $52 from $53. Other analysts have issued similar forecasts for CVS, noting that it’s likely to retain most of the customers its won, but will see decelerating growth.

Walgreen stock has underperformed CVS by 6% this year. And over the past 12 months, it’s a grim picture. CVS stock rose 21.5%, while Walgreen fell 17.8%. Meantime, RiteAid lost 6.9%.