Walgreens Boots (WBA) Sinks 5% Post EPS, Analysts Weigh In

Walgreens Boots Alliance (NASDAQ: WBA) shares have tumbled Thursday, down 5%, after the company reported earnings before the open.

The company reported third-quarter earnings per share of $0.96, bettering analyst estimates of $0.91 by $0.05. Revenue for the quarter came in at $32.6 billion, also beating the consensus estimate of $32.01 billion.

Both sales and profit decreased year over year due to weakening Covid-19 vaccination demand, investments in its health care business, and an opioid settlement with Florida.

Following the earnings release, analysts at Mizuho and Credit Suisse released notes:

On the results, Mizuho analyst Ann Hynes, who has a Neutral rating and a $49 price target on the stock, said: The quarter was impacted by a $683mm charge related to the opioid settlement with Florida. WBA administered 4.7mm COVID vaccines and 3.9mm tests in FQ3. The company maintained FY22 adjusted EPS growth guidance of low-single-digit, in-line with our expectations. WBA raised expectations for the base business from +6%-8% growth to +7%-9% growth due to strong US front store performance, offset by higher growth investments. Free cash flow was $1.3bn in the quarter."

Hynes added, regarding the company's decision to shelve the Boots sale, that they suspect the market backdrop is the main driver of the decision.

Credit Suisse analyst A.J. Rice, who has a Neutral rating and $52 per share price target on Walgreens Boots, stated: "Total adj EPS from continuing ops decreased 30.0% Y/Y to $0.96 (down 28.9% on a constant currency basis), $0.07/0.04 ahead of CSe/Cons. Sales from continuing ops in 3Q22 decreased 4.2% Y/Y to $32.6 bln (down 2.8% on a constant currency basis), which compares with consensus revs of $32.1 bln and CSe of $31.3 bln."

"The Y/Y decline was due to a 720 basis point impact from the sales decline at AllianceRx Walgreens. This was offset in part by international segment growth of 0.3% (9.3% on a CC basis) to $5.3 bln, reflecting the ongoing recovery in the UK market and growth in the German wholesale business," added Rice.

By Sam Boughedda

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