Walgreens Boots Alliance Inc. WBA,
will benefit from the digital know-how that the company’s recently announced CEO, Rosalind Brewer, will bring to the position, analysts say.
Brewer Joins Walgreens of Starbucks Corp. SBUX,
where she was chief operating officer. Previously, she was chief executive of Sam’s Club, Walmart Inc.’s WMT,
membership based warehouse salesperson. Previously, she worked at Kimberly-Clark Corp. for more than two decades. KMB,
Brewer is in the board at Amazon.com Inc. AMZN,
and will step down on February 16.
See: Walgreens calls on Starbucks CEO Roz Brewer as its new CEO
And: Starbucks’ COVID-related sales shift includes larger group orders
“While we are surprised that WBA has not hired a CEO with more of a healthcare background, we understand that Ms. Brewer is highly regarded and brings deep retail experience,” analysts from Mizuho Securities wrote in a note.
“Furthermore, Ms. Brewer is a current board member of Amazon, who is likely to value the stock higher given her insights into e-commerce.”
Its digital capability has also been honed at Starbucks, which has a thriving loyalty program and mobile operations.
Shares of Walgreens were up 4.8% Wednesday after the announcement late Tuesday.
Brouwer succeeds Stefano Pessina, who announced his departure in July. He becomes executive chairman of the board of Walgreens.
Brewer starts on March 15th. When she holds the position, she will be the only Black Woman CEO in the Fortune 500 and one of the few Black executives to hold the title of Chief Executive at a Fortune 500 company.
Mizuho’s analysts were optimistic about Walgreens’ future and the role Brewer could play in it.
Also: Walgreens sells majority of Alliance Healthcare’s pharmacy business to AmerisourceBergen in $ 6.5 billion deal
Ms. Brewer is joining WBA at an exciting time as the company is set to become a key player in the delivery of the COVID-19 vaccine, which should not only be a financial tailwind, but more importantly, we also think that there will be a non-quantifiable positive perception that could lead to customer loyalty in the age of e-commerce, ”said analysts.
But the company faces challenges.
However, her appointment does not diminish the operational and competitive structural issues facing WBA, given the lack of corporate diversification and lack of payer capacity. “
Walgreens is in a retail industry that has consolidated and become increasingly competitive. Mizuho says Walgreens has lost market share to CVS Health Corp. CVS,
Mizuho is neutral on Walgreens stock with a target price of $ 47.
“We look forward to hearing Ms. Brewer’s strategic vision for the future of the company, and we see her as a good fit given WBA’s focus on growing the major pharmacy businesses following the recently announced sale of its pharmaceutical distribution business. Alliance Healthcare to AmerisourceBergen. JPMorgan analysts wrote in a note.
The analysts emphasize Walgreens’ strategic focus on retail, including enhanced digital capabilities.
JPMorgan rates Walgreens equity neutral.
Walgreens stock is up 43% in the past three months, but is down 1.4% in the past year.
The benchmark S&P 500 index SPX,
is up 15.7% in the last 12 months.