Walgreens Boots Alliance (WBA) is set to report its fiscal first-quarter 2025 earnings before the opening bell on Friday, January 10. The pharmacy retailer had a challenging 2024, with its stock plunging by more than 60% amid declining reimbursement rates for prescription drugs, intense competition, and macro pressures on the retail business. As the company prepares to announce its Q1 FY25 earnings, analysts and investors are bracing for a steep decline in earnings and a modest increase in revenue.



Analysts expect Walgreens' adjusted earnings per share (EPS) to plunge by over 42% to $0.38 year-over-year in Q1 FY25, compared to $0.66 in the year-ago quarter. This significant decline is attributed to several factors, including net reimbursement pressure, lapping the reversal of incentive accruals, and prior year sale-leaseback gains, partly offset by cost savings and growth in the U.S. Healthcare segment. Additionally, analysts expect revenue to increase by a modest 1.9% to $37.4 billion, reflecting sales growth across all segments.



Heading into the Q1 results, TD Cowen analyst Charles Rhyee reiterated a Buy rating on Walgreens stock with a price target of $14. He expects the company to report Q1 FY25 adjusted EPS of $0.36 compared to the consensus estimate of $0.39. Rhyee thinks that much of the focus will be around the news of a potential takeover of WBA, although he expects management to provide little to no details on this matter. On December 10, the Wall Street Journal reported that Walgreens is in talks with private equity firm Sycamore Partners for its potential sale.

Meanwhile, JPMorgan analyst Lisa Gill reiterated a Buy rating on WBA stock with a price target of $15. She is optimistic about the company's ability to improve its performance, backed by its strategic initiatives, including the closure of underperforming stores. Gill views the potential sale of WBA's Boots business as a strategic move that can bring down its debt and enhance focus on the core U.S. healthcare assets.

Options traders are expecting a major move on earnings, with TipRanks' Options tool indicating an expected earnings move of 9.7% in either direction. This suggests that investors are anticipating a significant reaction to the earnings report.



Other analysts on the Street are more cautious about Walgreens' prospects. Overall, Wall Street is currently sidelined on WBA stock, with a Hold consensus rating based on two Buys, seven Holds, and three Sell recommendations. The average WBA stock price target of $13.67 implies 41.4% upside potential.

As Walgreens prepares to report its Q1 FY25 earnings, investors will be closely watching the company's performance and strategic initiatives. The pharmacy retailer's ability to navigate the challenging retail environment and execute on its turnaround plan will be crucial in determining its future prospects.