Walgreens Boots Alliance Inc.
will benefit from the digital know-how that the company’s newly-announced chief executive, Rosalind Brewer, brings to the role, analysts say.
Brewer is joining Walgreens from Starbucks Corp.
where she was chief operating officer. Previously, she was chief executive of Sam’s Club, Walmart Inc.’s
membership-based warehouse retailer. She also spent more than two decades at Kimberly-Clark Corp.
“Although we are surprised WBA did not hire a CEO with more of a healthcare background, it is our understanding that Ms. Brewer is well regarded and brings a deep experience in retail,” wrote Mizuho Securities analysts in a note.
“Further, Ms. Brewer is a current board member of Amazon, which will likely re-rate the stock higher given her insights into e-commerce.”
Her digital experience has been key at Starbucks as well, which has a thriving loyalty program and mobile business.
Walgreens shares rose 4.8% in Wednesday trading after the announcement late Tuesday.
Brewer succeeds Stefano Pessina, who announced his departure in July 2020. He will become executive chairman of the Walgreens board.
Brewer starts March 15. When she takes 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.
Mizuho analysts were upbeat about the Walgreens’ future and the part that Brewer can play in it.
“Ms. Brewer starts at WBA at an exciting time given the company is going to be a key player in the administration of COVID-19 vaccine, which should not only be a financial tailwind but, more importantly, we also think there will be unquantifiable positive perception impact that could create customer loyalty in the age of e-commerce,” analysts said.
But the company still faces challenges.
“However, her appointment does not erase the operational and competitive structural issues WBA faces given the lack of the business diversification and the lack of payer capability. “
Walgreens is also in a sector of retail that has consolidated and become increasingly competitive. Mizuho says Walgreens has lost market share to CVS Health Corp.
Mizuho rates Walgreens shares neutral with a $47 price target.
“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 core retail pharmacy businesses following the recently announced sale of the Alliance Healthcare pharma distribution business to AmerisourceBergen,” wrote JPMorgan in a note.
Analysts highlight Walgreens’ strategic focus on the retail business, including enhanced digital capabilities.
JPMorgan rates Walgreens stock neutral.
Walgreens stock has gained 43% over the past three months, but is down 1.4% over the last year.
The benchmark S&P 500 index
is up 15.7% for the last 12 months.