Walgreens CEO Pessina loses Wall Street's backing - Cahill - Crain's Chicago Business
The pharmacy chain's share price has tumbled 12 percent this year, driven by growing doubts that Pessina has the right strategy to counter a perceived threat from Amazon and meet fundamental industry challenges. How worried is Wall Street? Pessina's June 28 announcement of a $10 billion share repurchase plan failed to stem a 10 percent plunge in Walgreens shares after news broke the same day that Amazon had agreed to purchase online pharmacy PillPack. Since then six analysts have cut their ratings on Walgreens stock. Only 10 analysts now recommend buying Walgreens shares, while 16 have the equivalent of a "hold" rating on the stock. Even longtime fan Ross Muken at Evercore ISI pulled his "outperform" rating. Pessina has downplayed the Amazon move, telling analysts on Walgreens' third-quarter earnings call June 28 that "we are not particularly worried" and pointing out that "pharmacy work is much more complex than just delivering certain pills or certain packages." Asked if Amazon poses a significant threat, Gourlay says, "I don't think so,'' explaining that Walgreens already is working to improve supply chain efficiency and drug price transparency.