) to underperform from market perform.
Analyst John Ransom says results were in line with his and the consensus estimates. However, the results mark the second consecutive quarter of weak performance relative to expectations of Walgreen. While the discount retailer continues to outperform its peers, Ransom thinks valuation already reflects its bellwether status.
While Walgreen's business fundamentals justify the premium valuation relative to peers, Ransom says he thinks it should eventually move much closer to the market multiple, given the industry's declining fundamentals, and the limited likelihood that Walgreen will be able to sustain its annual earnings per share growth of more than 15% going forward.