Walgreens Boots Alliance (WBA) is set to report its fiscal first-quarter earnings on Friday, January 10, 2025. As the pharmacy retailer prepares to unveil its financial performance, analysts have been weighing in on their expectations and ratings for the company's stock. Here's a closer look at what analysts think of Walgreens ahead of its earnings report.



Analyst Ratings and Price Targets

Analysts have a mixed outlook on Walgreens stock, with five "hold" ratings, one "buy," and one "sell" rating among the seven analysts tracked by Visible Alpha. The stock has an average price target of $10, about 8% above its Wednesday close. The pharmacy chain is expected to report $37.33 billion in sales for the quarter, up from $36.71 billion the same time last year, according to estimates compiled by Visible Alpha. Walgreens is projected to report a net loss per share of 2 cents compared to 8 cents last year, but its adjusted earnings per share (EPS) is expected to be 38 cents per share, which would be down from 66 cents a year ago.

Key Factors Analysts Are Focusing On

1. Retail Pharmacy Segment Performance: Analysts, such as Lisa Gill from JP Morgan, have emphasized the importance of the retail pharmacy segment's performance. The segment's growth and profitability are crucial for Walgreens' overall financial performance.
2. Strategic Initiatives and Turnaround Plan: Walgreens announced a turnaround plan in October that included closing 1,200 stores over the next three years. Analysts are keen to hear management's comments on the progress of these initiatives and their impact on the company's financials.
3. Potential Acquisitions and Leveraged Buyouts (LBOs): Reports of Walgreens being in talks with private equity firms like Sycamore Partners for a potential acquisition or LBO have influenced analysts' ratings and price targets. While some analysts, like those at JP Morgan, believe the chances of an LBO are low, others may consider the possibility in their analyses.
4. Economic Conditions and Consumer Behavior: Analysts also consider broader economic conditions and shifts in consumer behavior when evaluating Walgreens' stock. The challenging retail environment, pressure on pharmacy reimbursement rates, and increased competition from online retailers are some of the factors that analysts may take into account.
5. Dividend Changes: Walgreens announced a significant reduction in its quarterly dividend in December 2024, from 48 cents per share to 25 cents per share. This decision, aimed at strengthening the company's long-term balance sheet and cash position, may impact analysts' ratings and price targets.



Analysts' Expectations for Earnings and Revenue

Analysts expect Walgreens to report adjusted earnings of 38 cents per share on revenue of $37.29 billion for the fiscal first quarter of 2025. This represents a significant improvement from the company's fiscal fourth quarter of 2024, during which it reported adjusted earnings of 66 cents per share on revenue of $36.71 billion. However, it is important to note that Walgreens' earnings and revenue have been volatile in recent years, with significant fluctuations from quarter to quarter.

Conclusion

As Walgreens prepares to report its fiscal first-quarter earnings, analysts have a mixed outlook on the company's stock. While some analysts are cautious, others see potential in the company's turnaround plan and strategic initiatives. Investors should pay close attention to the company's earnings report and the subsequent conference call, as management's comments on the progress of these initiatives and their impact on the company's financials will be crucial in determining the stock's future performance.