3 Analysts Provide Takeaways From Walgreens' Upbeat Results

Walgreens Boots Alliance Inc. WBA swung to a loss in the third quarter but managed to beat Street expectations.

The Deerfield, Illinois-based company reported that its sales had declined by 5.3% year-over-year to $32.4 billion and adjusted earnings of 80 cents per share, with both figures surpassing the consensus estimates of $32.12 billion and 77 cents per share, respectively.

Here's a look at some analyst takes from Credit Suisse Group AG CS, Mizuho Securities MFG and Raymond James Financial Inc. RJF.

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Credit Suisse

Analyst AJ Rice maintained a Neutral rating, while reducing the price target from $43 to $42.

Walgreens Boots Alliance’s earnings beat was driven by a lower-than-expected tax rate, Rice said in a note. “More importantly, the company provided FY23 EPS guidance of $4.45-4.65 (cons $4.51), which is better than expected give Covid headwinds,” he added.

Management also highlighted various actions being taken to return the company to growth, the analyst further mentioned.

Mizuho Securities

Analyst Ann Hynes reiterated a Neutral rating and a price target of $36.

The “greatest wildcard” in Walgreens Boots Alliance’s guidance is “the recapture of scripts in U.S. retail to achieve the baseline +10%-11% growth in U.S. retail ex-COVID” and a “worsening recessionary/inflationary backdrop above what is embedded in guidance,” Hynes wrote in a note.

With the mid-point of the earnings per share guidance for fiscal 2023 coming in-line with Street expectation, “now story becomes about execution."

Raymond James

Analyst John Ransom maintained a Market Perform rating.

“Specifically, the company reported revenue of $32.4B (Street: $32.1B; RJ: $32.5B), which was down -3.2% y/y on a constant currency (CC) basis, with adj. EBIT of $744M (RJ: $864M), down -39.8% y/y off a tough COVID comp,” Ransom said.

Regarding the guidance, the analyst wrote, “Management is citing a 15-17% headwind from lower COVID contribution ($0.80) vs. our expectation of $1.08, implying that WBA is modeling $0.28 more COVID contribution than our expectations in FY23.”

WBA Price Action: Shares of Walgreens Boots Alliance had risen by 1.19% to $34.05 at the time of publication Friday.