Analyst firm Cantor Fitzgerald cut Walgreen Company (WAG
) from “Hold” to “Sell,” as an analyst with the firm believes WAG stock is overpriced.
Cantor analyst Ajay Jain had the following comments about the cut to Walgreen’s rating: ”Our views on Walgreen's fundamentals are unchanged heading into 2Q earnings on 3/25. However, with WAG's share price up by close to 17% following the 1Q earnings release on 12/20, we can’t justify a HOLD rating without a meaningful increase in our price target. With WAG trading at an estimated forward PE multiple of 24x our FY:14 estimates, we are sticking to our guns on valuation.”
He added: ”WAG also discounts significant earnings upside from Alliance Boots even as the core earnings growth remains in the low-single digits. Finally, based on what we view as some questionable earnings quality recently, we think it’s appropriate to highlight this issue. While WAG had been our top pick after the strategic partnership with Alliance Boots was announced, we think the combined earnings power is more than fully reflected in the stock.”
Cantor has a $50 price target on the company, suggesting the stock will decline 10% from its current price.
WAG stock was inactive in pre-market trading. The stock is up 18.01% YTD.
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