Transcript
Page 1: Zacks Walgreen Co (2)

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Walgreen Co (WAG-NYSE)

SUMMARY

SUMMARY DATA

Risk Level * Below Avg.,

Type of Stock Large-Blend Industry Retail-Drug Str Zacks Industry Rank * 40 out of 267

Current Recommendation NEUTRAL

Prior Recommendation Outperform

Date of Last Change 03/13/2011

Current Price (04/24/14) $67.42

Target Price $71.00

Walgreens reported a mixed second quarter fiscal 2014 with adjusted earnings remaining below the Zacks Consensus Estimate while revenues exceeding the mark. As expected, Walgreens recorded improved revenues during the quarter on plump prescription sales. The company returned to sales growth with increasing return of Express Scripts customers following the resolution of their earlier impasse. However, sluggish front-end sales and difficult macroeconomic conditions remained looming concerns. Nonetheless, Walgreens gained a modest share in the retail pharmacy market. The higher first-year synergy from the Alliance Boots deal was another upside. We are also upbeat about the long-term three-pronged-deal with AmerisourceBergen. However, Walgreens strategy to win back earlier clients is still to be proven. The competitive landscape also remains tough. Accordingly, we remain Neutral on Walgreens.

52-Week High $69.09 52-Week Low $44.12 One-Year Return (%) 37.52 Beta 1.34 Average Daily Volume (sh) 6,221,896

Shares Outstanding (mil) 950 Market Capitalization ($mil) $64,061 Short Interest Ratio (days) 3.55 Institutional Ownership (%) 65 Insider Ownership (%) 8

Annual Cash Dividend $1.26 Dividend Yield (%) 1.87

5-Yr. Historical Growth Rates

Sales (%) 3.2 Earnings Per Share (%) 10.2 Dividend (%) 24.2

P/E using TTM EPS 21.0

P/E using 2014 Estimate 19.5

P/E using 2015 Estimate 17.3

Zacks Rank *: Short Term 1 3 months outlook 3 - Hold * Definition / Disclosure on last page

ZACKS CONSENSUS ESTIMATES

Revenue Estimates (In millions of $)

Q1 Q2 Q3 Q4 Year

(Nov) (Feb) (May) (Aug) (Aug)

2012 18,157 A 18,651 A 17,752 A 17,073 A 71,633 A

2013 17,316 A 18,647 A 18,313 A 17,941 A 72,217 A

2014 18,329 A 19,605 A 19,210 E 18,787 E 75,895 E

2015 19,107 E 20,310 E 80,526 E

Earnings Per Share Estimates (EPS is operating earnings before non-recurring items, but including employee stock options expenses)

Q1 Q2 Q3 Q4 Year (Nov) (Feb) (May) (Aug) (Aug)

2012

$0.63 A $0.78 A $0.62 A $0.48 A $2.53 A

2013

$0.58 A $0.96 A $0.85 A $0.73 A $3.12 A

2014

$0.72 A $0.91 A $0.94 E $0.88 E $3.45 E

2015

$0.85 E $1.04 E $3.90 E Note: Quarterly figures may not add up to the annual figure due to rounding off Projected EPS Growth - Next 5 Years % 12

April 25, 2014

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OVERVIEW

Headquartered in Deerfield, Ill., Walgreen Co. (WAG), popularly known as Walgreens, is the largest national retail pharmacy chain in terms of revenue and profitability. As of Nov 30, 2013, Walgreens operated 8,681 locations in all 50 states, the District of Columbia, Puerto Rico and Guam and the U.S. Virgin Islands, including 8,200 drugstores (142 more compared with the year-ago period). The company also operates infusion and respiratory service facilities, worksite health and wellness centers, specialty pharmacies and mail service facilities. Its Take Care Health Systems subsidiary manages more than 750 in-store convenient care clinics and worksite health and wellness centers.

The drugstores, apart from selling prescription drugs, also sell over-the-counter (OTC) medications, general merchandise, cosmetics, toiletries, household items and food and beverages. Due to carefully selected locations, the stores offer easy accessibility with many of them remaining open for 24 hours. The company ensures robust traffic in the stores by offering a broad selection of consumable merchandise backed by strong advertising programs.

In Aug 2012, Walgreens entered into a strategic partnership with a global international pharmacy-led health and beauty group Alliance Boots GmbH, in which it acquired a 45% stake for $6.7 billion. The company also has the option to obtain 100% ownership over the next three years for an approximate value of $9.5 billion in cash and stock.

Generic: The Current Scenario

The ongoing introduction of prescription drugs in the generic market is changing the mode of patient care which affects the business of drug retailers like Walgreens. The generic wave hampered Walgreens top-line in the past quarters. However, gross margin improved on account of higher generic prescription drug sales. While the introduction of generics has notably dragged sales over the last few quarters, the company expects the gross margin expansion to continue in the near term. Management asserted that the generic wave should significantly increase Walgreens gross profit per script compared to the gross margin which it earns on brands.

REASONS TO BUY

Prescription Drug Purchasing Front-Runner: Walgreens in its most recent effort to boost its market presence, decided to focus on its supply chain performance. With this aim, on Mar 18, 2013, the company along with Alliance Boots GmbH and AmerisourceBergen Corporation had announced various agreements and arrangements. It inked a 10-year pharmaceutical distribution agreement with AmerisourceBergen, effective Sep 1, 2013, to improve its global pharmaceutical supply chain for branded as well as generic drugs. AmerisourceBergen has replaced Walgreens former pharmaceutical distributor Cardinal Health as Walgreens contract with the latter had expired in Aug 2013. Earlier, AmerisourceBergen used to supply specialty drugs to Walgreens. The company s three-pronged deal with AmerisourceBergen underlines a strategic collaboration, equity alignment and distribution agreement. Apart from that, Walgreens entered into an agreement which provides AmerisourceBergen the ability to access generics and related pharmaceutical products through Walgreens Boots Alliance Development GmbH, a global sourcing joint venture between Walgreens and Alliance Boots. While Walgreens is riding the generic wave, the deal augments its buying capacity by a massive $3.5 billion. In calendar year 2014, AmerisourceBergen is expected to distribute substantial levels of generic pharmaceutical products that are currently distributed by Walgreens. At present, Walgreens is a step closer to exercising its right to purchase a minority stake in AmerisourceBergen following the regulatory clearance. As of Feb 25, the company purchased 10.5 million shares of AmerisourceBergen s stock and owned 4.5% of the company. Although the equity alignment is exercisable up to 23%, Walgreens can obtain a maximum of 30% stake (maximum limit per agreement) in AmerisourceBergen if the latter continues its share buyback activity. According to the company, the levels of generic pharmaceuticals distributed by AmerisourceBergen will increase throughout 2014. We believe, the contract between these three behemoths in their respective industries will build an incomparable global

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platform in the retail or wholesale pharmacy industry. This will create a kingpin in the prescription drug purchasing space helping Walgreens to better serve the U.S. and European healthcare systems along with other growing markets globally. Walgreens is optimistic about the financial and operational benefits from the AmerisourceBergen deal for fiscal 2014 with margin expansion and bottom-line accretion.

New Alignments to Boost Growth:

In Mar 2014, Walgreens formed collaboration with Lebhar-Friedman

Publishing to launch Discover Beauty Within, the first exclusive, beauty publication for mass retailer. The publication is focused on providing Walgreens and Duane Reade store customers with timely editorial content and valuable coupons on behalf of the retailers merchandising partners. In Jan 2014, Walgreens entered into a clinical collaboration agreement with Centura Health, a leading health care network in the U.S. to provide greater access to healthcare services. With the Affordable Care Act bringing millions of newly insured patients into the health care system, the relationship aims to help address some of the needs and challenges faced by both patients and caregivers. In September, Walgreens entered into a long-term partnership with Theranos, Inc., under which the new lab testing service of the latter will be available throughout the wide network of Walgreens pharmacies. As the largest retail pharmacy chain in the U.S. with more than 8,100 neighborhood pharmacies, Walgreens is expected to bring Theranos service to consumers nationwide. This service is currently available at Walgreens Palo Alto, California store. However, the company has plans to expand later this year. In Oct 2013, Walgreens also entered into a clinical collaboration with WellStar s Health System. As per the deal, the two companies will jointly provide coordinated and expanded health care services, while improving access to enhanced, inexpensive care for patients in the northwest Atlanta market. With the Affordable Care Act facilitating the entry of millions of new patients into the healthcare system, the merger is expected to be beneficial for Walgreens going ahead. It addresses the needs and challenges facing both patients and healthcare providers. These recent endeavors are expected to create a competitive edge for the company in the fast-growing pharmacy retailing market.

Strong Focus on Immunization Market:

Walgreens continues to strive to expand in the high-growth immunization market. It is currently the largest retail provider of flu immunizations in the U.S. In the last fiscal, the company provided more than 8.5 million immunizations, significantly up from 6.7 million the prior year. In the last reported quarter, the company witnessed a weak flu season compared to last year which resulted in fewer cough, cold and flu related prescriptions, and lower sales of over-the-counter products compared to the same period last year. However, it maintained meaningful promotional investments in daily living business in the quarter. In addition, through the first half of the fiscal 2014, Walgreens had a strong season for immunizations with a total of 8.6 million vaccines administered implying an increase of 11% year over year. Besides, the company also continued to build non-flu immunization business. Currently, Walgreens is the top retail provider of Zostavax, a vaccine for herpes zoster (shingles). This convinces us about the strength of Walgreens and its tremendous potential to grow its share in the $7.4 billion market.

In this regard, in Feb 2014, Walgreens formed an alliance with the National Minority AIDS Council (NMAC) to improve HIV treatment outcomes for African Americans living with HIV. This partnership will work to give improved pharmacists training and expand access to the pneumococcal vaccination specifically indicated for persons living with HIV as incidents of flu and pneumonia rise. Earlier in Jan 2014, reached its target to donate the value of three million life-saving vaccines for children in developing countries, upon successful completion of its immunizations campaign developed in partnership with the UN Foundation s Shot@Life campaign.

Moreover, to cover a huge 1.1 million HIV market in the U.S., in December Walgreens formed an alliance with the Centers for Disease Control and Prevention (CDC). Per the agreement, the company will develop a HIV patient-centered care model. According to Walgreens, this will be done through a national project to advance clinical integration and medication therapy management and will be helpful in improving HIV prevention and treatment outcomes. According to the agreement, 700 HIV-specialized pharmacies and specially trained Walgreens pharmacists with their lead medication care plans will provide data evaluation and outcomes reporting to thousands of HIV positive project participants. Walgreens pharmacists will meet

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these project participants directly and create care plans that focus on medication adherence and also address other needs that include health education for added chronic conditions.

Strategic Steps to Drive Growth:

In order to stimulate customer demand amidst a challenging

macroeconomic scenario, Walgreens has been taking a number of strategic steps. This includes the launch of customer loyalty program Balance Rewards in Sep 2012, which has recorded more than 100 million registrations to date. With almost 80 million active members Walgreens claims this to be the largest retail loyalty program in the industry. As per management, the Balance Rewards program has been generating majority of the sales. Besides, in Oct 2013, the company launched its new Balance Financial Prepaid MasterCard in Detroit, Milwaukee and Nashville. A nationwide card rollout is expected before year end and additional financial services in 2014.

In the quarter, the company also progressed with its other strategic growth driver which is, creating a Well Experience store. Notably, in 2011, Walgreens first introduced its Well Experience store format, which offers a new, enhanced layout, a completely revamped pharmacy and health care experience and a number of new product selections. Currently, Walgreens is successfully rolling out its Well Experience stores reaching a total of 628 across the country.

The company is also on an acquisition spree. Subsequent to acquiring a 45% stake in Alliance Boots GmbH for $6.7 billion, this leading retail pharmacy chain acquired a mid-South US-based regional drugstore chain for $438 million. Further, in Sep 2013, Walgreen inked a definitive agreement to acquire certain assets of privately owned regional pharmacy chain Kerr Drug, including 76 retail drugstores and specialty pharmacy business. The company believes that the wholesale business of Alliance Boots should improve its supply-chain performance. We believe that these steps will help expand its business in several key regions of the nation. As per management, Walgreens partnership with Alliance Boots is yielding positive results, with combined first half of fiscal 2014 synergies of $236 million. Moreover, the company expects second-year combined synergy program in the range of $375-$425 million, an increase from the previous second-year estimate of $350-$400 million. Moreover, the Alliance Boots deal was accretive by $0.08 to the EPS in the last reported quarter, in line with its expectation. The deal is expected to contribute $0.13 to $0.14 per share to adjusted earnings in the second quarter of fiscal 2014. As Walgreens strides on the synergy track, the company expects to attain synergies of $350 $400 million across joint operations in fiscal 2014 and $1 billion by the end of 2016. This alliance is expected to form the world s first pharmacy-driven health and wellbeing retail with more than 180,000 stores and distribution touch points in 26 countries. We are looking forward to all these new ventures of Walgreens and expect it to add to the company s growth going forward.

Strong balance sheet:

Walgreens

cash and cash equivalent at the end of the second quarter, fiscal 2014 were almost $1.77 billion significantly lower than $2.4 billion as of Feb 28, 2013. Long-term debt was higher at $4.49 billion in the reported quarter, compared with $5.1 billion as of Feb 28, 2013. Cash flow trends continued to remain strong with the qurter s operating cash flow of $1.1 billion compared with $1.2 billion in the same period last year. Free cash outflow in the quarter was $877 million versus inflow of $953 million a year ago. The healthy cash balance should support the company s plans for suitable acquisitions, to drive its revenues going forward. With a strong cash position, the company always strives to benefit its shareholders through dividend payments and share repurchases. Walgreens strong balance sheet has enabled it to consistently hike dividends. In July 2013, the company declared a 14.5% hike in its regular quarterly dividend to $0.315 per share ($1.26 for fiscal 2013), in line with its long term dividend payout ratio of 30% to 35%. The hike reflects a compound annual growth rate (CAGR) of 23% over 5 years. It is encouraging to note that the company has been paying dividends for more than 80 years and the recent hike marks the thirty-eighth consecutive quarter of dividend increase for the company. In the last fiscal, the company has returned more than $1 billion to its shareholders via dividends. Walgreens envisages operating cash flow of $8 billion by 2016. The company plans to review its capital deployment strategy. Meanwhile, Walgreens will continue to reward its shareholders with dividends as it boasts of a dividend growth track and share repurchase plans. In Jul 2011, the board of the company authorized the stock buyback program to repurchase up to $2 billion of its common stock through Dec 31, 2015. We note that in fiscal 2013, Walgreens did not repurchase any

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shares under its current buyback program. Investors may look forward to rewards in the form of considerable share repurchases. These efforts also underline the company s focus toward a healthy investment grade rating.

REASONS TO SELL

Current Uncertainty: During Jan to mid-Sep 2012, Walgreens was not a part of the pharmacy provider network of Express Scripts, which adversely affected its sales. As a result, the company suffered a prolonged period of lean sales. Sales lagged expectations in the reported quarter despite being the third full quarter to include the benefit from the return of Express Scripts customers. The company has been struggling to post relatively strong sales. A possible explanation could be the loss of customers due to the earlier impasse with Express Scripts. Despite the reconciliation with Express Scripts, Walgreens ability to win back its previous customers remains a matter of concern. Per management, the lower-than-expected front-end sales and unyielding macroeconomic conditions adversely affected the quarterly performance. While we believed that the persistent lower-than-expected sales will be remedied through the resolution of the impasse between Walgreens and Express Scripts, it is a time bound thing.

Competitive Landscape: Walgreens faces the headwinds of increased competition and tough industry conditions. Even though the company continues to grab market share from other traditional drug store retailers, major mass merchants such as Target and Wal-Mart are expanding their pharmacy businesses and enjoy a fair market share. We note that retail wing of CVS Caremark witnessed a record market share gain following the termination of the Walgreens-Express Scripts contract. Even with the resolution of the impasse, CVS is optimistic about retaining at least 60% of the prescription volumes gained during the stalemate of the stalwarts. While the company s sluggish performance is showing signs of improving with the return of customers, CVS management commentary of retaining a majority of the client wins raises our concern. There are also risks from other channels, such as supermarkets and mail order operations. In addition, industry conditions remain challenging, as insurers reduce reimbursement rates and increase prescription co-payments.

Source: Company Data (According to first quarter of fiscal 2013)

Additional Challenges:

Under the present weak macroeconomic environment, unemployment remains high at 8.3%, and food and gas prices are on the rise. Increasing costs coupled with unemployment makes the customers more value driven. Consequently, spending on discretionary items gets affected. We are of the opinion that this situation will impact same store sales growth. Our proposition is supported by the continued decline in customer traffic in comparable stores.

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RECENT NEWS

Q2 Earnings Miss at Walgreens

Mar 25, 2014

Walgreens reported adjusted net earnings of $0.91 per share in the second quarter of fiscal 2014, down 5.2% from the year-ago adjusted net earnings. The adjusted earnings also remained below the Zacks Consensus Estimate of $0.93. On a reported basis, earnings came in at $754 million or $0.78 per share, down 0.2% or down 1.2% year over year, respectively.

Walgreens sales came in at $19,605 million in the quarter, up 5.1% year over year and marginally ahead of the Zacks Consensus Estimate of $19,547 million.

Quarter in Detail

Front-end comparable store (those open for at least a year) sales and basket size grew 2.0% and 3.4%, respectively, in the quarter. On the other hand, customer traffic in comparable stores was down 1.4%. Overall, comparable store sales improved 4.3%.

Prescription sales (accounting for 62.2% of total sales in the quarter) climbed 7.0% over the prior-year quarter, while prescription sales in comparable stores increased 5.8%. Moreover, Walgreens filled 214 million prescriptions (up 2.8% year over year) during the reported quarter.

Prescriptions filled at comparable stores rose 2.2%. As reported by IMS Health, Walgreens market share in retail pharmacy improved 20 basis points (bps) to 19.0% at the end of Feb 2014.

The company s Balance Rewards loyalty program reached a milestone with approximately 100 million enrollees and 80 million active members at the end of the second quarter.

Gross profit increased a mere 0.8% year over year to $5.65 billion. However, gross margin contracted 125 bps to 28.8% due to fewer new generic drugs introduction, a less severe flu season and soft margin in front-end sales as the company made meaningful promotional investments to drive store traffic. The LIFO provision was $51 million in this year s second quarter versus $72 million last year.

Selling, general and administrative (SG&A) expenses scaled up 1.6% to $4.6 billion. Operating margin contracted 44 bps to 5.5%.

The company opened/acquired 28 stores in the reported quarter compared with 29 in the year-ago quarter. As of Feb 28, 2014, the company operated in 8,681 locations in 50 states, the District of Columbia, Puerto Rico and Guam and the U.S. Virgin Islands, including 8,210 drugstores (138 more compared with the year-ago period). The company also operates worksite health and wellness centers, infusion and respiratory service facilities, specialty pharmacies, mail service facilities, e-commerce business and Take Care Health Systems.

Financial Condition

Walgreens exited the second quarter with cash and cash equivalents of $1.77 billion, significantly lower than $2.4 billion as of Feb 28, 2013. Long-term debt was higher at $4.49 billion in the reported quarter, compared with $5.1 billion as of Feb 28, 2013.

Moreover, the company has generated year-to-date operating cash flow of $1.47 billion in the quarter compared with $1.17 billion in the same period last year.

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Striding Ahead on Synergy Track

Walgreens partnership with Alliance Boots is yielding positive results, with combined first half of fiscal 2014 synergies of $236 million. In the second quarter, the Alliance Boots deal was accretive to adjusted earnings by $0.08. The company estimates that accretion from Alliance Boots in the third quarter will be an adjusted $0.13 to $0.14 per share. Moreover, the company expects second-year combined synergy program in the range of $375-$425 million, an increase from the previous second-year estimate of $350-$400 million.

VALUATION

Walgreens reported a mixed fiscal second quarter with a bottom line miss and a marginal beat on the top-line front. The generic wave in the pharmaceutical industry is still a threat to revenues. This is also reflected in the company's quarterly sales figure.

Nevertheless, Walgreens is poised to generate higher profits from escalating sales of higher-margin generic drugs. Besides, we believe that Walgreens financial strength and sizeable market share in retail pharmacy should leverage the company s sales growth. Walgreens is also positioned on a healthy dividend growth track. Further, the customer loyalty program is gaining traction as reflected in increasing registrations. This should improve customer traffic for Walgreens.

Walgreens in its most recent effort to boost its market presence, decided to focus on supply chain performance. We currently look forward to synergies from the Alliance Boots deal. The deal with AmerisourceBergen, likely to create a leader in the generic and branded drug purchasing space, is another major upside. Walgreens is optimistic about financial and operational benefits from the deal for fiscal 2014, with margin expansion and bottom-line accretion. Evidently, management seems to have chalked out a number of strategic initiatives to revive growth for the company.

However, Walgreens remains susceptible to macroeconomic headwinds. It also faces increased competition and tough industry conditions. Notably, sliding customer traffic is another downside for Walgreens. The tussle to gain market share against CVS Caremark is another cause of concern. As a result, we prefer to remain on the sidelines at present and keep an eye on ongoing developments. We thus maintain our Neutral recommendation on the stock with a target price of $71.00, which is based on 20.5x our fiscal 2014 earnings estimate of $3.45.

Walgreens current trailing 12-month earnings multiple is 21.0x, compared with 18.4x for the S&P 500 and Industry Average of 53.0x. Over the last five years, Walgreens shares have traded in a range of 11.4x to 21.2x trailing 12-month earnings.

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Key Indicators

P/E F1

P/E F2

Est. 5-Yr EPS Gr%

P/CF (TTM)

P/E (TTM)

P/E 5-Yr High (TTM)

P/E 5-Yr Low

(TTM) Walgreen Company (WAG) 19.5 17.3 12.0 14.9 21.0 21.2 11.4

Industry Average N/M 32.9 15.8 14.0 53.0 N/M 10.2 S&P 500 16.1 15.0 10.7 13.7 18.4 27.7 12.0

CVS Caremark corporation (CVS) 16.4 14.5 13.4 12.8 18.2 18.7 10.0 Rite Aid Corporation (RAD) 19.7 14.9 17.5 9.2 23.0 21.3 6.8 Herbalife Ltd. (HLF) 9.5 8.2 17.8 8.8 10.7 21.5 6.0

TTM is trailing 12 months; F1 is 2014 and F2 is 2015, CF is operating cash flow

P/B Last Qtr.

P/B 5-Yr High

P/B 5-Yr Low

ROE (TTM)

D/E Last Qtr.

Div Yield Last Qtr.

EV/EBITDA (TTM)

Walgreen Company (WAG) 3.0 3.1 1.7 15.5 0.2 1.9 12.5

Industry Average 3.9 3.9 3.9 32.1 0.3 4.1 N/M S&P 500 4.4 9.8 3.2 23.8

0.0

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Earnings Surprise and Estimate Revision History

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DISCLOSURES & DEFINITIONS

The analysts contributing to this report do not hold any shares of WAG. The EPS and revenue forecasts are the Zacks Consensus estimates. Additionally, the analysts contributing to this report certify that the views expressed herein accurately reflect the analysts personal views as to the subject securities and issuers. Zacks certifies that no part of the analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendation or views expressed by the analyst in the report. Additional information on the securities mentioned in this report is available upon request. This report is based on data obtained from sources we believe to be reliable, but is not guaranteed as to accuracy and does not purport to be complete. Because of individual objectives, the report should not be construed as advice designed to meet the particular investment needs of any investor. Any opinions expressed herein are subject to change. This report is not to be construed as an offer or the solicitation of an offer to buy or sell the securities herein mentioned. Zacks or its officers, employees or customers may have a position long or short in the securities mentioned and buy or sell the securities from time to time. Zacks uses the following rating system for the securities it covers. Outperform- Zacks expects that the subject company will outperform the broader U.S. equity market over the next six to twelve months. Neutral- Zacks expects that the company will perform in line with the broader U.S. equity market over the next six to twelve months. Underperform- Zacks expects the company will under perform the broader U.S. Equity market over the next six to twelve months. The current distribution of Zacks Ratings is as follows on the 1013 companies covered: Outperform - 15.0%, Neutral - 78.2%, Underperform

6.4%. Data is as of midnight on the business day immediately prior to this publication.

Our recommendation for each stock is closely linked to the Zacks Rank, which results from a proprietary quantitative model using trends in earnings estimate revisions. This model is proven most effective for judging the timeliness of a stock over the next 1 to 3 months. The model assigns each stock a rank from 1 through 5. Zacks Rank 1 = Strong Buy. Zacks Rank 2 = Buy. Zacks Rank 3 = Hold. Zacks Rank 4 = Sell. Zacks Rank 5 = Strong Sell. We also provide a Zacks Industry Rank for each company which provides an idea of the near-term attractiveness of a company s industry group. We have 264 industry groups in total. Thus, the Zacks Industry Rank is a number between 1 and 264. In terms of investment attractiveness, the higher the rank the better. Historically, the top half of the industries has outperformed the general market. In determining Risk Level, we rely on a proprietary quantitative model that divides the entire universe of stocks into five groups, based on each stock s historical price volatility. The first group has stocks with the lowest values and are deemed Low Risk, while the 5th group has the highest values and are designated High Risk. Designations of Below-Average Risk, Average Risk, and Above-Average Risk correspond to the second, third, and fourth groups of stocks, respectively.

Analyst Urmimala Biswas

Copy Editor Anindita Sinha

Content Editor Urmimala Biswas

Lead Analyst Urmimala Biswas

QCA Souvik Guha

Reason for Update Earnings


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