On Jun 17, we issued an updated research report on Walgreens Boots Alliance, Inc. WBA. The company has been reaping the benefits of its growth initiatives and major business tie-ups. However, fierce competition and tough industry conditions are concerns. The stock currently carries a Zacks Rank #3 (Hold).
In second-quarter fiscal 2020, the company showed strong uptick in Retail Pharmacy USA that came from comparable prescription sales growth and a strong retail prescription market. Rise in Pharmaceutical Wholesale sales added to the optimism. Amid the coronavirus-led doldrums, these businesses recorded sales growth on higher customer demand.
Progress made with new strategic partnerships was impressive too. Walgreens’ tie-ups with Alphabet’s life sciences and healthcare segment, Verily on multiple projects related to chronic ailments buoyed optimism. Regarding Walgreens’ newly-formed partnership with Kroger, the company stated that the grocery trials in the U.S. retail segment are progressing well. Also, the company recently entered into a multi-year Medicare agreement with UnitedHealthcare.
Walgreens Boots Alliance, Inc. Price
Walgreens Boots Alliance, Inc. price | Walgreens Boots Alliance, Inc. Quote
On the flip side, given so many rapidly-changing variables related to the pandemic, it is currently difficult to gauge its impact on the company. Hence, Walgreens refrained from updating its fiscal guidance for now. The company aims to update the fiscal guidance on its next earnings call.
Further, the year-over-year decline in adjusted earnings is concerning. Challenging market conditions, particularly in retail, have been inducing sluggishness in the Retail Pharmacy International division. Tough market conditions, particularly in retail, and a tough competitive landscape are the other headwinds for the company.
Over the past six months, shares of the company have underperformed its industry. The stock has lost 26.3% compared with the broader industry’s fall of 17.6%.
Some better-ranked stocks from the broader medical space are Quest Diagnostics Incorporated DGX, Hologic, Inc. HOLX and QIAGEN N.V. QGEN.
Quest Diagnostics’ long-term earnings growth rate is projected at 7.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hologic’s long-term earnings growth rate is estimated at 7%. The company presently has a Zacks Rank #2.
QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently sports a Zacks Rank #1.
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