Can Walgreens Boots Alliance Stock Keep Soaring?

Walgreens Boots Alliance (WBA) has been on a rollercoaster ride in recent years, with its stock price experiencing significant fluctuations. As of January 13, 2025, the company's stock price was $11.76, a 6.97% increase from the previous year. However, the company's financial performance has been volatile, with a net loss per share of $0.31 in the first quarter of fiscal 2025, compared to a loss per share of $0.08 in the year-ago quarter. The loss per share in the current quarter includes costs related to the Footprint Optimization Program and an after-tax charge for fair value adjustments on variable prepaid forward derivatives related to the monetization of Cencora shares.

Despite the recent loss, Walgreens Boots Alliance maintained its fiscal 2025 adjusted EPS guidance of $1.40 to $1.80, with growth in U.S. Healthcare and International more than offset by a decline in U.S. Retail Pharmacy, a higher adjusted effective tax rate, and lower contributions from sale-leaseback and Cencora earnings. The company's sales increased 7.5 percent year-over-year to $39.5 billion, up 6.9 percent on a constant currency basis, reflecting sales growth across all business segments.

Walgreens Boots Alliance's strategic focus on healthcare and biotech has contributed to its growth potential. The company's U.S. Healthcare segment, which includes its partnership with VillageMD, has shown promising growth. In fiscal 2024, the segment achieved an adjusted EBITDA increase of $442 million, demonstrating the potential of this strategic focus. Additionally, the company's cost savings initiatives, working capital improvements, and net debt reduction have contributed to its overall growth potential. The company's footprint optimization program, targeting approximately 1,200 closures over three years, is expected to be immediately accretive to adjusted EPS and free cash flow, further enhancing its growth prospects.

However, Walgreens Boots Alliance faces several risks and challenges in maintaining its stock momentum. The company has experienced a decline in net income and adjusted EPS due to net reimbursement pressure, lapping the reversal of incentive accruals, and prior year sale-leaseback gains. This trend may continue to impact the company's financial performance and stock momentum. Additionally, the company expects a decline in the U.S. Retail Pharmacy segment in fiscal 2025, which may negatively impact overall sales and earnings. The company's footprint optimization program may also lead to temporary disruptions in operations and potential job losses, which could negatively impact the company's reputation and stock momentum.

In conclusion, Walgreens Boots Alliance's stock performance in recent years has been influenced by several key factors, including its strategic priorities, financial results, sales performance, and strategic actions. The company's strategic focus on healthcare and biotech has significantly impacted its growth potential, with the U.S. Healthcare segment demonstrating promising growth. However, the company faces several risks and challenges in maintaining its stock momentum, including reimbursement pressure, net income decline, U.S. Retail Pharmacy segment decline, and the impact of the footprint optimization program. Investors should closely monitor the company's financial performance and strategic initiatives to assess the potential for continued stock growth.