Walgreens Boots Alliance, Inc. WBA is slated to release second-quarter fiscal 2024 results on Mar 28, before market open.
In the first quarter of fiscal 2024, the company topped earnings estimates by 4.8%. WBA’s earnings outperformed the Zacks Consensus Estimate in two of the trailing four quarters and missed the same in two, the average negative surprise being 0.77%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Walgreens is likely to have gained from successful executions of growth strategies on the United States and the international fronts. The company’s network of micro fulfillment centers is helping stabilize staffing and pharmacy hours, reduce work full pain points and free up capacity to drive the outcomes that matter most to the patients and partners. WBA is also piloting a virtual pharmacy to redefine connected care, increase patient access, enhance workplace flexibility and extend its pharmacist reach. During the fiscal first quarter, Walgreens partnered with academia and specifically, key schools of pharmacy to explore ways to attract, recruit and create a dynamic workplace for the next generation of pharmacists. This is likely to have benefited the company’s top line in the fiscal second quarter.
During first-quarter fiscal 2024, Walgreens established assets in a capital-efficient way to expand services and support patients and partners. The company partnered with pharma companies to help drive greater patient diversity in clinical research. Till the fiscal first-quarter earnings release, Walgreens signed more than 25 contracts, with a robust pipeline of opportunities ahead. We believe this development to have contributed to the company’s growth in second-quarter fiscal 2024.
In December 2023, Walgreens’ Wholly-owned subsidiary — AllianceRx Walgreens Pharmacy — announced that it would distribute Tarsus Pharmaceuticals-manufactured XDEMVY (lotilaner ophthalmic solution) 0.25%. The same month, Walgreens launched Rx Savings Finder — a simple-to-use digital tool designed to help customers save money on prescription medications. The new tool consolidates free third-party discount cards, providing patients with a quick and easy way to find lower prices on their Walgreens medications. We expect these developments to have contributed to the company’s revenues in the quarter to be reported.
United States
Walgreens is likely to have registered growth in the U.S. retail pharmacy business as script volume is likely to have gained traction through the fiscal second quarter.
Lately, the company launched multiple programs across its pharmacy and U.S. healthcare business. It continued to see engagement from payers and partners for clinical quality initiatives that leverage its integrated assets. Within Pharmacy Services, the vaccines portfolio, which includes flu, COVID, RSV and other routine vaccinations, performed well in the fiscal first quarter. These developments are likely to have contributed to the company’s performance in the to-be-reported quarter.
In the United States, Walgreens’ retail business witnessed impressive momentum through digital and omnichannel growth from the myWalgreens loyalty program, owned brand innovation and other profit streams. During the fiscal fourth quarter, U.S. Pharmacy comp sales increased 13.1%, driven by brand inflation, mix impacts and comp script growth. This is likely to have continued through the fiscal second quarter as well.
The Zacks Consensus Estimate suggests that Walgreens’ U.S. Healthcare business will register an increase of 25.8% in the fiscal second quarter from the year-ago reported figure.
International
Recently, the international business of WBA has registered an ongoing rebound and strong execution across its retail portfolio, particularly in Boots U.K. and growth in the German wholesale business. The company is expected to have registered strong growth in the fiscal second quarter, banking on continued positive trends globally.
During the fiscal first quarter, comp retail sales registered an upside across all categories, led by beauty and health and wellness. The company also saw year-on-year growth across all store formats, with flagship and travel locations performing exceptionally well. Boots increased retail market share for the11th consecutive quarter, led by beauty. We believe these trends to have continued through the quarter to be reported, thus boosting the company’s revenues.
Walgreens Boots Alliance, Inc. Price and EPS Surprise
Walgreens Boots Alliance, Inc. Price and EPS Surprise
Walgreens Boots Alliance, Inc. price-eps-surprise | Walgreens Boots Alliance, Inc. Quote
The Zacks Consensus Estimate suggests that the Walgreens International business will likely register an increase of 3.2% in the fiscal second quarter from the year-ago reported figure.
Earnings Whisper
For second-quarter 2024, the Zacks Consensus Estimate for total revenues is pegged at $36.48 billion. The projection indicates a 4.7% rise from the prior-year comparable quarter’s reported figure. The consensus mark for earnings is pegged at 82 cents, suggesting a 29.3% fall year on year.
What Our Model Suggests
Our proven model does not conclusively predict an earnings beat for Walgreens this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: Walgreens has an Earnings ESP of +0.75%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #4 (Sell).
Stocks to Consider
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this reporting cycle.
Lantheus Holdings, Inc. LNTH has an Earnings ESP of +0.16% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
LNTH’s earnings beat estimates by 18.24% in the last reported quarter. It has a four-quarter average earnings surprise of 14.84%.
Cencora Inc. COR has an Earnings ESP of +0.57% and a Zacks Rank of 2.
COR’s earnings beat estimates by 14.69% in the last reported quarter. It has a four-quarter average earnings surprise of 6.69%.
DaVita Inc. DVA has an Earnings ESP of +0.41% and a Zacks Rank of 1.
DVA’s earnings beat estimates by 22.22% in the last reported quarter. It has a four-quarter average earnings surprise of 35.57%.
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