NEW YORK (TheStreet) -- Shares of Walgreen Co. (WAG) are slightly lower in pre-market trade after it was reported that a billion-dollar forecasting error in the company's Medicare-related business cost the jobs of two top executives and alarmed big investors, the Wall Street Journal reports.
At an April board meeting, CFO Wade Miquelon forecast $8.5 billion in fiscal 2016 pharmacy-unit earnings, based partly on contracts to sell drugs under Medicare. Then in July, directors got a shock. Miquelon suddenly cut that forecast by $1.1 billion, the Journal says.
Earlier this month, the CFO was gone. Walgreen said several days earlier that its pharmacy chief, Kermit Crawford, would retire at year-end.
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Behind the botched numbers and management shake-up are Walgreen's efforts to capture a larger role as a middleman dispensing prescription drugs under Medicare's Part D, which subsidizes costs for the elderly and disable, according to the Journal.
TheStreet Ratings team rates WALGREEN CO as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:
"We rate WALGREEN CO (WAG) a BUY. This is driven by several positive factors, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, impressive record of earnings per share growth, compelling growth in net income, largely solid financial position with reasonable debt levels by most measures and solid stock price performance. We feel these strengths outweigh the fact that the company shows low profit margins."