UPDATE: Raymond James Downgrades Walgreen Company to Market Perform, Reiterates $62 PT Following Deep Dive Analysis

In a report published Tuesday, Raymond James analyst John W. Ransom downgraded the rating on Walgreen Company WAG from Outperform to Market Perform, but reiterated the $62.00 price target. In the report, Raymond James noted, “We are downgrading shares of Walgreen to Market Perform from Outperform following our deep dive analysis into the company's FY16 combined EBIT targets. In short, these targets look more difficult to achieve following the surprisingly slow (~3%) organic FY13 EBIT growth at Walgreen (ex-synergies), despite the tailwinds from both a strong generic calendar and the recovery of nearly +40 million ESI-prescriptions. While we remain optimistic about upside to the long-term synergy capture from the Alliance Boots transaction, we believe that the stock price now reflects much of this upside, as FY16 pro-forma P/E valuation has nearly doubled from 7x to start the year (and the time of our upgrade) to 13x on lower assumed FY16EPS. Specifically, as we incorporate lower EBIT growth projections, we now project pro-forma FY16 EPS to be $4.70 versus the $5.24-5.55 original range and adjusted EBIT of $8.1 billion vs. the $9.0-9.5 billion guidance.” Walgreen Company closed on Monday at $60.12.