The Zacks Analyst Blog Highlights: Canadian Solar, First Solar, SunPower, Walgreen and Express Scripts
CHICAGO, Sept. 13, 2012 /PRNewswire/ — Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Canadian Solar Inc. (Nasdaq:CSIQ), First Solar Inc. (Nasdaq:FSLR), SunPower Corporation (Nasdaq:SPWR), Walgreen (NYSE:WAG) and Express Scripts (Nasdaq:ESRX).
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Here are highlights from Wednesday’s Analyst Blog:
CSIQ Deal Aids Solar Project Funding
Solar cell manufacturer Canadian Solar Inc. (Nasdaq:CSIQ) has taken initiatives to assist its customers for the smooth completion of solar projects in the US. A major obstacle to the proper and timely completion of big commercial solar projects is inadequate financing. To remove this stumbling block Canadian Solar has collaborated with global financing solutions provider De Lage Landen Financial Services, Inc. (“DLL”).
Per the collaboration, De Lage Landen Financial Services will provide the necessary financial assistance to Canadian Solar’s customers to complete solar energy instillations. The finance company will provide lucrative financing options, which includes up to 100% financing of a total project’s cost for qualified end-users, along with favorable terms of up to 120 days on purchases for its commercial installer and solar developer partners.
We believe this initiative to provide financial assistance to the user will encourage further development of solar projects in the country. Development and increasing use of alternate sources of energy go well with the long-term agenda of most of the states in the U.S.
At present, 30 U.S. states and the State of Columbia have enforceable renewable portfolio standards or other renewable generation policies. These policies were designed to spread awareness and encourage the power generators to produce more from renewables.
The share of renewable fuels (including conventional hydro) in energy generation is projected to grow from 10% in 2010 to 16% in 2035, as per the U.S. Energy Information Administration’s (“EIA”) long-term outlook. We believe solar energy will also play an important part in the power generation process.
The present initiative on part of Canadian Solar is particularly pertinent at a time when struggling economies around the globe are thinking about a roll-back of solar subsidy. Not only will Canadian Solar customers, constructing solar farms, be assured of the quality of the solar cells, the necessary financing for these capital-intensive projects will also be taken care of.
Based in Ontario, Canada, Canadian Solar, together with its subsidiaries, engages in the design, development, manufacture and marketing of solar cell and solar module products that convert sunlight into electricity for various domestic and international uses. With a market capitalization of $126 million, the company presently has 9,087 full time employees.
Walgreen’s Prices $4B Senior Notes
Walgreen’s (NYSE:WAG) has priced its senior notes, the proceeds of which will be used primarily to repay borrowings, costs and expenses related to the acquisition of a 45% equity interest in Alliance Boots GmbH for an aggregate purchase price of $6.7 billion.
The company is issuing the notes in five installments – $500 million of floating rate notes due 2014; $750 million of 1.0% senior notes due 2015; $1.0 billion of 1.8% senior notes due 2017; $1.2 billion of 3.1% notes due 2022and $500 million of 4.4% senior notes due 2042. The issuance of these notes will close on September 13, 2012.
Besides repayment of a loan related to this acquisition, the company also intends to use the net proceeds of the offering for general corporate purposes including its previously announced USA Drug acquisition. On July 23, 2012, the company entered into an unsecured 364-Day Bridge Term Loan Agreement with a borrowing limit of up to $3.5 billion to fund a portion of the first phase of the Alliance Boots acquisition.
Historically, Walgreen Co. has been using its cash balance to make strategic acquisitions as well as rewarding its shareholders through share repurchases and dividend payments. During the last reported quarter, the company returned $371 million, including $195 million in dividends and $176 million through the share repurchase program.
The company also declared a 28.6% hike in its regular quarterly dividend to $0.275 per share, in line with its long term dividend payout ratio of 30-35%. It is encouraging to note that the company has been paying dividends for more than 79 years and the recent hike marks the 37(th) consecutive quarter of dividend increase for the company. We believe that suitable acquisitions on the back of healthy cash balance should drive its revenues going forward.
On August 6, 2012, Walgreen’s acquired a 45% stake in global international pharmacy-led health and beauty group Alliance Boots with the aim of becoming the world’s first pharmacy driven health and well-being retailer with more than 11,000 stores in 12 countries. Walgreen’s also holds an option to acquire the remaining stake over the next three years for an approximate value of $9.5 billion in cash and stock.
Walgreen Co. expects the first step of this transaction to be accretive to its earnings per share (EPS) by 23-27 cents in the first year. The company also expects the synergies across joint operations to be between $100 million and $150 million in the first year and $1 billion by the end of 2016.
Walgreen’s believes that this joint company will form a major global network in pharmaceutical wholesale and distribution with over 370 distribution centers catering to 170,000 pharmacies, doctors, health centers and hospitals across 21 countries. Furthermore, it will also be considered as the largest purchaser of prescription medicines and many of the health and wellbeing products.
We are also encouraged with the settlement with Express Scripts (Nasdaq:ESRX), which had dragged on for 7 months. The Express Scripts contract loss was a blow to Walgreen’s, since the earlier contract used to contribute a significant part to its sales (12.6% of total prescriptions filled in August 2011). As a result, the company’s results have disappointed since the beginning of 2012.
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