4% same store sales is very strong, particularly in light of the fact AEO has been promoting less and running higher margins. I think today's reaction was in part due to the stock price having held up in the face of market selloffs this week and today's news making AEO look a little more vulnerable. Not a big deal to me. I bought more this morning at $14. I could have done better obviously with a little more patience but I feel very good about the prospects of returning to $18. I think AEO at $14 gives me a great opportunity to outperform the markets this year/
Bloomberg has pointed out this morning (with charts) that previous N. Korean nuclear tests have not affected the markets. Why would this one be any different?
Yep, there are a lot of examples around the country of similar situations. Walgreens will not gain 4600 stores. They will close stores and move the files to the better storefront locations. Feds will probably make them sell of some Rite-Aid locations. Many people will lose jobs. When they talk about savings from synergies, they are mostly talking about giving people their walking papers. It is sad for those who lose jobs and perhaps find difficulty finding a new one. It's not something however that you can blame on Walgreens. They are acting like every other big corporation in America. Whenever two companies merge the primary benefit is from reducing the overall labor costs. The Dow Chemical and Dupont merger will cause more unemployment than the WBA/RAD merger. It's one of the uglier truths of capitalism. In the long term it is more efficient, so you overlook the tragedy if you are a capitalist.
WBA says they can see $1billion in synergies. Bringing Walgreens buying power to Rite-Aid stores will make them more profitable. Walgreens advertising genius will increase the foot traffic in Rite-Aid stores. Deals like the one Walgreens just made with Valeant demonstrates the power Walgreens enjoys with nationwide coverage which will be even more complete with the Rite-Aid deal. I can see other manufacturers taking advantage of Walgreens distribution strength and cutting deals which will bring more volume and better margins to Walgreens. Walgreens distribution agreement with ABC will allow Rite-Aid stores to reduce inventory and operate more efficiently. That's just a few thoughts off the top of my head. There is probably much more.
Earning 1-7. Usually get a little run before earnings, but 100 seems very unlikely. Maybe 90. Don't see any other reason for it to run in January unless there is news.
bond, you clearly do not grasp what is happening here. The only reason CVS wants people to buy compounded equivalent to daraprim is that Turing is not rebating them for putting daraprim on their formularies. Turing has chosen instead to contract with Walgreens lowering the AWP of many products and thus making the savings available to the customer instead of the greedy Caremark division of CVS. Turing has stated they will also contract with independent pharmacies. It is true that Turing has overpriced some products. Even with the discount contracts, those products will be over priced considering Turing does no research. Still, the discount is better than nothing and if Turing followed the convention pattern of rebating the PBM's, little of that discount would find it's way to the consumer. I would not object to the compounded equivalent of Daraprim. I do object to CVS bringing it up as an alternative just because Turing chose not to rebate them for the branded product. There have, as we know, been a lot of problems with certain compounded products when they are made in mass. It begins to resemble manufacturing without the quality control requirements that go with manufacturing. There could be some issues there but I don't see the government stepping in as they want to see the price reduced.
This is why the contract between WBA and Valeant could be the beginning of the end for Caremark and Express Scripts. PBM's have been reaping huge rebates from manufacturers and passing along a small part of it to the purchasers of Rx Drug insurance. In contrast the WBA/Valeant deal is stated to lower the AWP thus insuring that the savings go to the purchasers of the drugs. The value to WBA will be the ability to sell at a lower price than their competition. Caremark & Express Scripts will suffer, but not unduly.
He finds it threatening that a drug retailer can sign a contract with a manufacturer. He thought that was the private realm of PBM's and he is plenty scared that other manufacturers will sign similar contracts circumventing the PBM's. It's a very real threat to CVS/Caremark and to a lesser extent Express Scripts. I say it's way overdue and will benefit the public by lowering some drug prices. CVS/Caremark wants it all in their pocket. This demonstrates how the WBA/RAD merger could benefit retail purchasers of prescription drugs. Caremark and Express Scripts have been taking big slice of the RX dollar while passing very little of it on to those who pay the bill for high drug prices. Should this become an industry trend it could certainly benefit WBA and consumers of RX drugs.
You are trying to make it all about risk/reward, while it's actually about supply/demand. risk/reward does affect supply and demand but mostly that's a long term effect and you can't always explain an individual stock movement on that which is moving the total market. Most of the daily movements in WBA probably are related to institutions and funds which buy and sell for reasons that should not concern the individual holder of WBA.
You are right, but it's really a much different scenario for Pfizer. Most people don't know when they take a Pfizer manufactured product. There is no real public relations issue for them. If the doctor prescribes Lipitor for you, that's what you buy. without regard to who manufactures it or whether they are good corporate citizens. Walgreens on the other hand sits right on the street corner and deals directly with the public every day. It's easy enough to walk across the street to CVS if you don't like Walgreens politics. Few people pay any attention to who manufactures the drugs they take or where they manufacture them.