Walgreen's Remains Above Consensus, Goldman Maintains Buy Rating

Goldman Sachs has published a research report on Walgreen Company WAG after the company reported February quarter results above consensus.

In the report, Goldman Sachs writes "Our $0.85 estimate, vs. $0.68 a year ago, stands $0.05 ahead of consensus; we stand above the Street on gross margin, based on front-end initiatives and generic penetration, and on expense control. Management spoke to tougher cost compares in 2Q, but, assessing “core” SG&A (ex-Duane Reade and restructuring), we do not see evidence of them in year-ago numbers; slower SG&A growth in 2Q10 reflected lower rewiring investments, not lower core costs. We model “core” SG&A per foot growth – excluding the impact of rewiring and one-off costs – of +1.7% in 2Q vs. 1Q's (0.2%) decline. We raised this expense forecast as sales beat our forecasts over the course of the quarter."

Goldman Sachs maintains its Buy rating and $48 price target.

Walgreen Company closed yesterday at $41.17.