Credit Suisse sees strong 2012 for Walgreen Co.

By Associated Press
Posted March 29 at 5:02 p.m.

A Credit Suisse analyst upgraded shares of Walgreen Co. on Tuesday, saying the drugstore chain should have a strong year in 2012.

Analyst Edward Kelly upgraded Walgreen stock to “Outperform” from “Neutral.”

He said investors are underestimating the boost Walgreen will get in 2012 from new generic drugs, including lower-cost versions of Lipitor and Plavix. Kelly said generics should raise the Deerfield, Ill., company’s profit by 6 percent to 8 percent or more.

Walgreen’s fiscal year ends in August, so the year 2012 will be split between the company’s fiscal 2012 and 2013.

“We have been critical of the company’s execution in the past but believe its turnaround is finally beginning to take hold,” he wrote. “Sales have improved, management’s focus on more profitable growth has boosted margins, (its selling, general and administrative spending) has surprised on the upside, and free cash flow allocation has improved dramatically.”

Kelly holds a price target of $46 per share on Walgreen stock.

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