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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Walgreens Boots Alliance, Inc.    WBA


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Walgreens misses profit estimates on pharmacy weakness, shares fall 7%

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01/08/2020 | 11:42am EST
FILE PHOTO: A Walgreens pharmacy store sign is photographed in Austin, Texas

Walgreens Boots Alliance Inc quarterly profit missed Wall Street estimates on Wednesday, hit by lower payments from insurers on drugs sold at its U.S. pharmacies, knocking back its shares and those of rival CVS Health Corp.

The company sought to reassure investors, saying it would meet its adjusted full-year profit forecast of roughly flat growth, betting on cost cuts and a harsh flu season.

But shares fell nearly 7% to $55, dragging down those of CVS 2%, as investors worried that the pressure on reimbursement rates from insurers was likely to hurt profits further.

Walgreens has also been struggling with disappointing performance in its Boots UK unit and intense competition from the arrival of Amazon.com Inc in the pharmacy market in the past year.

To cushion the impact, Walgreens has closed stores and launched cross-selling partnerships with companies including grocer Kroger Co and weight-loss clinic operator Jenny Craig.

"The changes in our markets are obscuring some of the positive impact we are having," said Chief Executive Officer Stefano Pessina. "This will not be the case forever."

Insurers and pharmacy benefit managers in the United States have been seeking to push more of the cost of the drugs they pay for - and reimburse - to the pharmacy chains that actually deliver them to insured consumers.

In recent years, the Deerfield, Illinois-based company had benefited from steep falls in generic drug prices that helped it offset the pressure from lower reimbursement rates, but such declines have slowed in the past year.

"Profitability and sales growth may be hard to come by for the foreseeable future in this era of reimbursement pressure and a rapidly changing health care environment," said Edward Jones analyst John Boylan.

Walgreens said on Wednesday it had completed 114 of the 200 planned namesake store closures in the United States and 28 of a scheduled 200 Boots UK closures. The company's cost cutting program, launched in 2018, aims to save more than $1.8 billion annually by 2022.

Boots, acquired in 2014, has struggled with competition from online retailers, as well as a broader decline of the UK high street, which has seen dozens of major retailers collapse in recent years.

Excluding items, Walgreens earned $1.37 per share, short of estimates of $1.41.

Revenue rose 1.6% to $34.34 billion, but missed analysts' estimate of $34.60 billion.

Shares have fallen 15.3% in the past 12 months, making them the worst performer on the Dow Jones Industrials Average index.

By Manas Mishra and Trisha Roy

Stocks mentioned in the article
ChangeLast1st jan.
AMAZON.COM, INC. -0.79% 2153.1 Delayed Quote.16.52%
CVS HEALTH CORPORATION 0.22% 71.94 Delayed Quote.-3.16%
KROGER 0.81% 29.78 Delayed Quote.1.90%
WALGREENS BOOTS ALLIANCE, INC. -0.38% 51.87 Delayed Quote.-12.03%
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Financials (USD)
Sales 2020 140 B
EBIT 2020 6 485 M
Net income 2020 4 014 M
Debt 2020 14 815 M
Yield 2020 3,55%
P/E ratio 2020 11,4x
P/E ratio 2021 10,1x
EV / Sales2020 0,43x
EV / Sales2021 0,41x
Capitalization 45 950 M
Duration : Period :
Walgreens Boots Alliance, Inc. Technical Analysis Chart | MarketScreener
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Technical analysis trends WALGREENS BOOTS ALLIANCE,
Short TermMid-TermLong Term
Income Statement Evolution
Mean consensus HOLD
Number of Analysts 24
Average target price 56,35  $
Last Close Price 51,87  $
Spread / Highest target 25,3%
Spread / Average Target 8,64%
Spread / Lowest Target -13,2%
EPS Revisions
Stefano Pessina Executive Vice Chairman & Chief Executive Officer
James A. Skinner Executive Chairman
Ornella Barra Co-Chief Operating Officer
Alexander W. Gourlay Co-Chief Operating Officer
Richard M. Ashworth President-Operations
Sector and Competitors