Walgreens, Express Scripts, Rite Aid Corporation, CVS Caremark and St. Jude Medical Inc. highlighted in Zacks Analyst Blog:
CHICAGO, Jan. 15, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Walgreens (WAG), Express Scripts (ESRX), Rite Aid Corporation (RAD), CVS Caremark (CVS), and St. Jude Medical Inc. (STJ).
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Here are highlights from Tuesday's Analyst Blog:
Walgreens Discusses Growth Strategy
Recently, Walgreens (WAG) debriefed the investors on its growth strategy for fiscal 2013, while discussing the current business environment and providing a recap of its performance in fiscal 2012.
Fiscal 2012 Recap
Despite a challenging year, Walgreens attained several milestones in fiscal 2012. The company made tuck-in acquisitions and forged a strategic partnership with Alliance Boots. Further, Walgreens launched its Balance Rewards loyalty program in September 2012, which has recorded more than 50 million registrations to date.
The company generated record cash flow from operations of $4.4 billion in fiscal 2012 out of which $1.9 billion was returned back to its shareholders via stock repurchases and dividends. The payment of the largest quarterly dividend in the company's history was another takeaway in the fiscal.
By adopting appropriate strategies, Walgreens was also able to convert its fiscal 2012 headwinds into tailwinds for the ongoing fiscal. Among these, the most important turnaround is the new multi-year pharmacy network agreement with pharmacy benefit manager Express Scripts (ESRX) (from September 2012), under which the company's pharmacy network has started filling prescriptions from Express Scripts customers.
Growth Drivers for 2013 and Beyond
The company's three-pronged strategy of providing a holistic Well Experience, improving the role of community pharmacy, and forging strategic alliances is likely to yield positive results. Notably, the company has left no stone unturned to bolster sales, ranging from a customer loyalty program to stimulate consumer demand to resorting to inorganic means.
In order to supplement its Well Experience approach, Walgreens continues to enhance its products and services. Moreover, the company is currently investing in private brands such as Walgreens, Delish and Nice! among others.
Furthermore, Walgreens is the largest provider of vaccinations and immunizations in the U.S., with respect to community pharmacy. As per management, about 70% Americans are without a primary care physician and over 30 million of the U.S. population will gain insurance coverage in 2014 under the health care reforms. Consequently, revenue contribution from this franchise is expected to be more significant.
The strategic alliance with Alliance Boots has also allowed Walgreens to expand its worldwide foothold, especially in Europe. The company believes that the wholesale business of Alliance Boots should improve its supply-chain performance. Also worth mentioning in this context is Walgreens' increasing focus on emerging markets as the pharmaceutical sector in these markets present significant growth opportunities.
Our Take
The recent developments regarding Walgreens continues to display its strength in pursuing strategic initiatives as reflected in the bullish momentum of its stock price. The stock inched towards its 52-week high of $39.21 on January 11, 2013.
Following its annual shareholders' meeting, estimate revision trends also reflect a bullish sentiment toward Walgreens over the last 7 days. The positive revisions in the Zacks Consensus Estimate for fiscal 2013 as well as fiscal 2014 underline these events.
While fiscal 2012 was a challenging year for Walgreens, we look forward to fiscal 2013 with sublime optimism. We currently have a long-term Neutral recommendation on the stock which carries a Zacks Rank #3 (Hold). Its peers Rite Aid Corporation (RAD) carries a Zacks Rank #1 (Strong Buy) and CVS Caremark (CVS) carries a Zacks Rank #2 (Buy).
St. Jude Reports Prelim 4Q Results
Medical devices major, St. Jude Medical Inc. (STJ) released preliminary results for the 2012-fourth quarter. The company will report its financial results on Jan 23, before markets opens.
St. Jude expects adjusted earnings for the quarter in the range of 90 cents—92 cents per share, surpassing its earlier guidance of 86 cents–88 cents. This compared with the Zacks Consensus Estimate of 89 cents for the quarter.
Adjusted earnings exclude one-time item charges of 50 cents–60 cents per share related to restructuring and other corporate activities. Management stated that sales growth and cost reduction measures will lead to the improvement in earnings.
Revenues
Total revenues for the quarter, on a constant currency basis, are projected to be $1,372 million, down 1% year over year. The Zacks Consensus Estimate for revenues is $1,370 million.
Segment Review
Based on the above projections, revenues from the core Cardiac Rhythm Management (CRM) business declined 6% (5% on a constant currency basis) to $682 million. Within CRM, Implantable cardiac defibrillators (ICD) revenues were down 3% at $422 million. This segment continues to be plagued by the Durata lead issues. Pacemaker revenues declined 11% to roughly $260 million.
Neuromodulation revenues decreased 7%, (down 6% in constant currency) year over year to $113 million. Revenues from St. Jude's Cardiovascular segment inched down 1% (up 1% in constant currency) to $338 million. Within Cardiovascular segment, structural heart devices revenues increased 1% to $152 million but the same from vascular offerings dipped 2% to $186 million. However, on a positive note, Atrial Fibrillation (AF) revenues climbed 10% (up 11% in constant currency) to $239 million in the quarter.
About the company
St. Jude, with a market cap of $11.80 billion, is a leading medical devices manufacturer maintaining a solid rate of growth over the past decade. We are impressed by the company's efforts in leveraging its margins by undertaking various restructuring initiatives and controlling expenses.
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