Despite the intervening volatility, the stock is up 28% on a YTD basis. On a 52 week basis it has done better with a 37% rise. The earnings had led to a big correction, but key supports held and it made smart comeback. It is again looking a little tired, but the volumes have not been very high during the recent leg of the correction over last couple of weeks. The company has done well over the years with reasonable growth in revenues and net income. However, the stock price has also kept pace, and hence any slippages make the stock vulnerable to correction. Resolution of the dispute with Express Scripts helped increase the positivity, though the recent corrections have dampened the sentiments a bit. An article on seekingalpha had recently predicted that the stock can double in three years, mainly based on the expected positive effects of the partnership with Alliance Boots. Though it may not be too easy to double in three years, it is also not impossible to reach close to those levels in slightly longer time. It is true that going by the past performance, the company can deliver decent growth over time, and the dividends will remain an attraction to hold the stock. Expected growth in prescription drugs sales (e.g. due to aging population) will help. The non-prescription drugs /merchandise contributes 37% of the sales. New products often grow faster, and help in improving the pace of growth. Chromadex Corporation's (CDXC) vitamin derivative nicotinamide riboside has high potential for growth. Walgreen can look at some other products which are more in line with its segment focus. Competition from giants like CVS Caremark (CVS) and Rite Aid (RAD) cannot be ignored, and the company will need to work hard for each percentage of growth. Improving the margins will also require continuous efforts.
I agree with much of what you say. I would point out though, that when Greg Wassom made his comments about producing revenues of $130B by 2016, the number was not pulled out of thin air and you can bet it is not just achievable, but likely. Alliance Boots is a piece of that, but also important is the deal with Bergen and the implementation of Obamacare. Obamacare boosts not only rx sales but also the Healthcare Clinics. As for alliance boots, when WAG purchases the remaining 55% of the company in 2015 that will be a big boost in revenues. Revenues from Boots so far have been minimized by a weak British Pound. The trend has reversed and if the Pound continues to strengthen and Boots continues to expand it's European presence, don't underestimate the ability of Boots to bolster revenues and earnings. Also as Walgreens takes it's position in Bergen (ABC) which should be 23% of the company by sometime in 2015 (this is dependent on buying the other 55% of Boots), revenues and earnings will be positively impacted.