CONSUMER STAPLES: Walgreen Boots; More opioid legal trouble
(WBA: BB- Stable/B1 Stable) (Stock -10% in US aftermarket)
District Court in Illinois has filed suit alleging "Walgreens pharmacists filled millions of controlled substance prescriptions with clear red flags that indicated the prescriptions were highly likely to be unlawful". Walgreens responded immediately saying it was not clear how far its responsibilities as a Pharmacist extended and the government was enforcing "arbitrary rules".
This legal trouble is not new for 'any' Pharmacy operator in the US. In 2022 Walgreen reached a Multi-state settlement to pay $4.95b in remediation over 15 years and without an admission of guilt. It is guiding to a sizeable $1.1b in (cash) legal payments this year and a has recorded a total $6.6b liability against opioid related litigation on the balance sheet.
We encourage caution on the €26s that have rallied in to Z+170, partly helped by take-private rumours triggering 101 CoC hopes. Near term catalyst still look negative for fundamentals and will leave the line exposed to 2Q earnings still. Wizz 26s are at Z+130 after also rallying in - a value view and more recently our preferred risk in the short-end on sell-offs.
Lawsuit; https://mni.marketnews.com/3E3oHs4
Walgreens response; https://mni.marketnews.com/3E21O8l