Credit Suisse First Boston upgraded Walgreen (WAG) to outperform from in-line.
Analyst Jack Murphy says Walgreen is the best-managed, highest growth company that he follows. He believes the share price will reverse its underperformance in 2003, outpacing other publicly traded drugstores and supermarkets. He notes Walgreen presents a short-term risk; the company might post fourth-quarter earnings per share that are 1 cent shy of the 27 cents consensus (his estimate is 26 cents earnings per share.)
Murphy says easy sales comparisons over the next several months mitigate his concerns that private prescription plans may further reduce benefits in late 2003, and that the launch of over-the-counter Prilosec may be more than 2 cents dilutive to fiscal 2004 (Aug.) earnings per share. He raised the $32 target to $38.