Could

Walgreen

(WAG)

rock the world -- or at least shake the street -- when it reports its earnings next week?

That's the take of Credit Suisse analyst Edward Kelly, who said in a note Thursday that the drugstore could surpass third-quarter expectations when it reports earnings on June 22.

The news sent shares up 3% to $31.74 in afternoon trading.

Analysts expect the company to post a profit of 56 cents a share, but Kelly said it could be as high as 58 cents. Walgreen may also exceed expectations in fiscal 2010 and 2011.

Kelly raised his price target on the stock to $38 per share from $32.

But why the optimistic outlook? According to Kelly, sales of liquor and Walgreen's plan for "customer-centric retailing" should improve sales even if the economy does not turn around soon. Store growth, and Walgreen's "Rewiring for Growth" cost-cutting plan, could also allow it to beat estimates next year.

Kelly now expects Walgreen to earn $2.55 a share in fiscal 2010, compared to a Wall Street average of $2.29, and forecasts $2.80 per share for 2011, but said the company could earn as much as $3 per share.

Rival

Rite Aid

(RAD) - Get Report

will report its results on June 24. Shares of Rite Aid tanked by more than 7% to $1.24 in afternoon trading, while

CVS Caremark

(CVS) - Get Report

was up slightly 1% to $31.07.

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