Walgreens Boots Alliance, Inc. (NASDAQ:WBA) charged with misleading investors with rosy earnings forecasts
The Securities and Exchange Commission charged Walgreens Boots Alliance Inc., WBA, -1.23% former CEO Gregory Wasson, and former CFO Wade Miquelon on Friday with misleading investors by publicly reaffirming earnings forecasts despite increased risks of missing the projections, after the Walgreen Co. merger with Alliance Boots GmbH in 2012. Walgreens, Wasson, and Miquelon did not admit or deny the findings, but Walgreens Boots Alliance will pay a $34.5 million penalty, and Wasson and Miquelon will each pay a $160,000 penalty.
Walgreens announced its two-step merger with Alliance Boots in June 2012, and at the same time projected that the combined entity would generate $9 billion to $9.5 billion in combined adjusted operating income in the 2016 fiscal year. However, after completing the first step of the merger, its internal forecasts indicated that the risk of missing its 2016 projection had increasing significantly. Instead of alerting investors, Walgreens, Wasson, and Miquelon repeatedly publicly reaffirmed the rosier projections.
When Walgreens subsequently announced that it was moving forward with the second step of the merger in August 2014, it announced an adjusted earnings projection of $7.2 billion for fiscal 2016, a 20% decline over its initial projection and its stock price dropped 14.3% on the day of the announcement.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 69.66.
The projected upper bound is: 75.20.
The projected lower bound is: 70.92.
The projected closing price is: 73.06.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 27 white candles and 22 black candles for a net of 5 white candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with WALGREEN BOOTS). It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 59.4111. This is not an overbought or oversold reading. The last signal was a sell 3 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 65.34. This is not a topping or bottoming area. However, the RSI just crossed below 70 from a topping formation. This is a bearish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 0 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 90. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 11 period(s) ago.
Rex Takasugi – TD Profile
WALGREEN BOOTS closed down -0.910 at 72.900. Volume was 29% below average (neutral) and Bollinger Bands were 28% wider than normal.
Open High Low Close Volume___
73.820 74.000 72.750 72.900 4,871,240
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 72.26 68.97 68.13
Volatility: 19 20 32
Volume: 4,861,459 5,501,472 6,134,994
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
WALGREEN BOOTS is currently 7.0% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into WBA.O (mildly bullish). Our trend forecasting oscillators are currently bullish on WBA.O and have had this outlook for the last 11 periods.
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