Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

In the most recent strategic maneuver to boost its pharmacy network, Walgreens (WAG - Analyst Report), the largest retail pharmacy chain in the U.S., extended its agreement as a network pharmacy provider in the CVS Caremark (CVS - Analyst Report) pharmacy benefit management (PBM) retail network. The deal appears to be an attractive play to gain more clout in a tough competitive environment.

The deal should improve customer traffic at Walgreens stores which failed to improve in recent months. It should also improve volumes at the company’s comparable stores on the back of demographic tailwinds.

While the financial details and terms of the agreement remain undisclosed, the extended multi-year agreement is well aligned with Walgreens’ objectives. The company’s multi-year agreement will support cost-effective pricing and fair reimbursement for services and value for patients and payers.

Apart from CVS Caremark, Walgreens also has a multi-year agreement with the largest PBM in the U.S. Express Scripts (ESRX - Analyst Report). After few months of fallout in 2012, Walgreens and Express Scripts announced a new multi-year agreement, effective Sep 15, 2013. Walgreens suffered a prolonged period of lean sales during the impasse, reflecting the importance of its inclusion in the pharmacy provider network of Express Scripts.

There has been a lot of commotion surrounding the stock as Walgreens has been on a deal-making spree of late. In March, the company inked a long-term deal with AmerisourceBergen Corp. (ABC - Analyst Report), effective Sep 1, 2013, in order to improve its global pharmaceutical supply chain for branded as well as generic drugs. AmerisourceBergen will replace Walgreens’ current pharmaceutical distributor Cardinal Health as the existing contract is set to expire in Aug 2013.

Last year, Walgreens resolved its seven-month impasse with Express Scripts and extended its global reach with a strategic deal with Alliance Boots.

Evidently, Walgreens is leaving no stone unturned to post relatively strong sales. We believe that the deal should lend some positive momentum to the stock, which carries a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
VERTEX ENERG VTNR 8.25 +10.59%
MODINE MANUF MOD 17.12 +8.77%
CLAYTON WILL CWEI 140.03 +7.27%
E*TRADE FINA ETFC 22.67 +5.44%
KNIGHTSBRIDG VLCCF 13.22 +5.42%