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Walgreens Boots Alliance Inc. WBA,
will benefit from the digital know-how that the company’s newly announced chief executive, Rosalind Brewer, brings to her role, analysts say.
Brewer joins Walgreens from Starbucks Corp. SBUX,
where she was chief operating officer. Previously, she was General Manager of Sam’s Club, WMT of Walmart Inc.,
membership based warehouse retailer. She previously spent over two decades at Kimberly-Clark Corp. KMB,
Brewer is a member of the board of directors of Amazon.com Inc. AMZN,
and will be leaving this post on February 16.
See: Walgreens selects Roz Brewer, CEO of Starbucks, as new CEO
And: Starbucks’ COVID-related sales change includes larger group orders
“While we are surprised that the WBA has not hired a CEO with more health training background, we understand that Ms. Brewer is well regarded and brings extensive retail experience,” wrote the Mizuho Securities analysts in a note.
“Additionally, Ms. Brewer is currently a member of Amazon’s board, which will likely re-rate the stock upwards given her knowledge of e-commerce.”
Its digital capability has also been honed at Starbucks, which has a thriving loyalty program and mobile business.
Walgreens shares rose 4.8% on Wednesday after the announcement Tuesday night.
Brewer succeeds Stefano Pessina, who announced his departure in July. He will become executive chairman of the board of directors of Walgreens.
Brewer begins March 15. When she takes the job, she will be the only black female CEO in the Fortune 500 and one of the few black executives to hold the title of CEO of a Fortune 500 company.
Mizuho analysts were optimistic about the future of Walgreens and the role Brewer can play in it.
Also: Walgreens Sells Majority of Alliance Healthcare’s Pharmacy Business to AmerisourceBergen in $ 6.5 Billion Deal
Ms. Brewer is starting at WBA at an exciting time as the company is going to be a key player in administering the COVID-19 vaccine, which should not only be a financial tailwind but, more importantly, we also believe that “There will be an unquantifiable positive perception impact that could build customer loyalty in the age of e-commerce,” analysts said.
But the company faces challenges.
“However, his appointment does not erase the structural operational and competitive issues that the WBA faces given the lack of business diversification and the lack of payer capacity. “
Walgreens is in a distribution sector which has consolidated and has become increasingly competitive. Mizuho says Walgreens lost market share to CVS Health Corp. CVS,
Mizuho believes Walgreens shares are neutral with a price target of $ 47.
“We look forward to hearing Ms. Brewer’s strategic vision for the future of the business, and we see her as a good fit given WBA’s focus on growing core retail pharmacy businesses. following the recently announced sale of Alliance Healthcare’s pharmaceutical distribution business to AmerisourceBergen. JPMorgan analysts wrote in a note.
Analysts highlight Walgreens’ strategic focus on retail, including enhanced digital capabilities.
JPMorgan considers Walgreens stock to be neutral.
Walgreens stock has gained 43% in the past three months, but is down 1.4% from a year ago.
The S&P 500 SPX benchmark,
is up 15.7% over the past 12 months.
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