2 Walgreens Analysts On Why They're Sidelined After Q3 Earnings

The third-quarter report from Walgreens Boots Alliance, Inc. WBA Thursday surpassed Wall Street expectations, with an EPS beat of 19% and reported revenue of $34 billion, $500 million higher than expectations, according to a Raymond James analyst. 

The Walgreens Analysts: Raymond James analyst John Ransom reiterated a Neutral rating.

Credit Suisse analyst A.J. Rice maintained a Neutral rating on Walgreens and lowered the firm's price target from $50 to $48. 

Raymond James On Walgreens: Walgreens finalized the sale of the Alliance Healthcare business for $6.5 billion and intends to pay off $3.3 billion in debt and strategically invest the remaining cash sum, RayJay's Ransom said in a note. 

The company also reported a "10% adjusted EPS from continuing operations growth," primarily reflecting the third-quarter beat, implying adjusted fourth-quarter EPS of 97 cents, which is around 18.5% lower than previous Wall Street expectations, the analyst said. 

Credit Suisse On Walgreens: The pharmacy chain reported a doubling in market share for COVID-19 vaccinations in comparison to the start of the year, according to a Friday Credit Suisse note.

Walgreens also highlighted that an unstable environment and uncertainty around swing factors will affect both the company's future costs and FY2022 guidance, Rice said. 

Additionally, sales and gross profits increased both domestically and internationally, he said. 

Credit Suisse revised its 2021-2023 EPS estimates "to $4.71/$5.01/$5.33 from $4.60/$5.25/$5.80."

The revised estimates reflect the concern of "increased severity and duration of impact from COVID-19 as well as reduced tailwinds to offset reimbursement pressure," Rice said.

The increase in the 2021 EPS estimate is in line with Walgreens' management's updated FY2021 guidance, the analyst said. 

WBA Price Action: Shares of Walgreens Boots Alliance were down 1.8% at $47.84 at last check Friday.