NEW YORK (TheStreet) -- Investors hated Walgreens (WAG) decision to buy Alliance Boots in 2012. Now, after shares in the drugstore chain more than doubled since the deal's initial announcement, Wall Street is again disappointed.
Walgreens shares fell as much as 15% on Wednesday morning after the company said that it wouldn't shift its headquarters abroad as it completes the two-step acquisition of Alliance Boots. The company also lowered revenue targets for the combined company to between $126 billion and $130 billion from a previous guidance of more than $130 billion in annual sales.
Wednesday's share rout is familiar territory for Walgreens and a possible opportunity for long-term investors. After all, the company's stock tumbled to multi-year lows below $30 a share in July 2012 after initially announcing its Alliance Boots deal. Shares, which then steadily rose to a record-high above $75 in June, are now in the low $60s.
Once investors absorb Walgreens disappointing guidance, its decision not to chase tax savings by incorporating abroad and a different financial outlook after shifting guidance from earnings before interest and taxes (EBIT) to earnings per share (EPS), they may remember that Alliance Boots looks like a compelling acquisition.
Expectations on synergies and cost savings from Alliance Boots catapulted Walgreens shares in recent years, and those targets remain in place. Perhaps, after Walgreens cut its guidance for operating earnings by around $2 billion, the company has set a low bar from which it can now beat Wall Street's expectations in fiscal 2016 and beyond.