Reuters: Global Markets: UBS adds Walgreen to "most preferred" list, stock up

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UBS adds Walgreen to "most preferred" list, stock up Apr 17th 2012, 19:12 By Jessica Wohl Tue Apr 17, 2012 3:12pm EDT (Reuters) - Walgreen Co (WAG.N) shares rose 5 percent on Tuesday after UBS added the drugstore chain to its "most preferred" list, and an analyst said he expected a resolution to the company's dispute with Express Scripts Inc (ESRX.O) in the coming months. Analyst Jason DeRise put grocer Supervalu Inc (SVU.N) on the "least preferred" list, saying that its upcoming annual report may raise more concerns about its fiscal 2013 guidance. Along with Walgreen, DeRise added grocer Harris Teeter Supermarkets (HTSI.N) to the "most preferred" list. Walgreen stopped filling millions of prescriptions for patients in the Express Scripts pharmacy benefits management network on December 31, after the companies failed to agree on a new contract. Losing the Express Scripts business cut 7 cents per share from Walgreen's earnings in the latest quarter, but the largest U.S. drugstore chain has repeatedly said that leaving the Express Scripts network was the right decision. DeRise said he expects Walgreen and Express Scripts to reach a resolution on reimbursement rates "in the coming months, which we believe will allow (Walgreen) shares to re-rate to its pre-dispute multiple," UBS said. Walgreen's shares were up 4.7 percent at $34.87 in afternoon trading after rising as high as $35.02, the highest level since late March. Before the companies' dispute was disclosed last June, Walgreen shares traded above $45. Express Scripts shares rose 2.8 percent to $58.40. Walgreen was not immediately available to comment, and Express Scripts declined to comment. SUPERVALU ISSUES, HARRIS TEETER EARNINGS Supervalu's annual report, expected to be released later this week, may reveal a previously undisclosed inventory benefit or show that the grocer took pricing above its cost inflation, DeRise said in a research report. Last week, Supervalu posted a better-than-expected profit and gave a full-year profit forecast above Wall Street's view, sending its shares higher. Supervalu was not immediately available to comment. Its shares slid 0.8 percent, or 5 cents, to $6.47. DeRise noted that Harris Teeter shares have traded down considerably lately ahead of its quarterly earnings report, which is due on May 3. Through Monday, shares of the company previously known as Ruddick Corp have fallen 5.7 percent this month. They rose 2.4 percent to $38.72 in afternoon trading on Tuesday. DeRise has "buy" ratings on Walgreen and Harris Teeter and a "sell" rating on Supervalu. (Reporting by Jessica Wohl in Chicago, additional reporting by Lewis Krauskopf in New York; Editing by Maureen Bavdek) Link this Share this Digg this Email Reprints

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