Citigroup Reiterates Sell Rating on Walgreen Co. (WAG)

Citigroup is out with a research report this morning, where it reiterates its Sell/High Risk rating on Walgreen Co. WAG; it has a $33.00 price target on the stock. The Citi analysts cited the company's recent shareholder meeting, where WAG was optimistic as it moves through F2011 for three reasons: 1) “The CCR stores continue to gain traction 2) There is a significant opportunity to increase basket size with fresh food offerings 3) The expansion of the 90-day at retail Rx program.” The Citi analysts believe that a weak consumer and competition from other value-oriented formats will continue to have a negative impact on FE sales. Additionally, the generic wave will likely have limited impact until F2013, making Rx SSS difficult past the 2010/11 flu season. As for valuation, the analysts remarked, “In our forward P/E analysis, we apply a target multiple of approximately 12x to our calendarized 2011 EPS estimate, below WAG's historical 10-year mean P/E of 25x.”