Moody's: Walgreen outlook stable

Moody's Investors Service said it changed Walgreen Co.'s outlook to stable from negative and affirmed its A2 senior unsecured rating and Prime-1 commercial paper rating.

The change in outlook reflects the successful resolution of the dispute between Walgreen and CVS that resulted in the companies entering into a new pharmacy network plan agreement, the agency said, adding that Walgreen will no longer experience a sizable loss in its revenue.

Walgreen's A2 senior unsecured rating is supported by its strong market position in the highly fragmented retail pharmacy industry, a segment whose performance is expected to remain solid given industry fundamentals, Moody's said.

Walgreen is weakly positioned in the A2 rating level given that its credit metrics are weak for the rating, the agency said. However, Moody's believes Walgreen's very good liquidity and its low level of funded debt relative to its size offset the negative ratings consideration given to its weakly positioned credit metrics.

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