Walgreens Boots Alliance Inc

Walgreens Boots Alliance, Inc. (NASDAQ: WBA) is an integrated healthcare, pharmacy and retailing company. Its segments include U.S. Retail Pharmacy, International, and U.S. Healthcare.

Recent Business and Financial Updates

• Third Quarter Financial Highlights: In the third quarter of fiscal year 2024, WBA reported significant financial metrics. Earnings per share (EPS) stood at USD 0.40, a notable increase from USD 0.14 in the year-ago quarter, which included a non-cash impairment of pharmacy license intangible assets in Boots UK. Adjusted EPS declined by 36.6% on a constant currency basis to USD 0.63, reflecting challenges in the U.S. retail environment and recent trends in the pharmacy industry. Third quarter sales increased by 2.6% year-over-year to USD 36.4 billion, demonstrating growth across all segments.
• Fiscal 2024 Guidance: WBA has adjusted its fiscal 2024 guidance for adjusted EPS to a range of USD 2.80 to USD 2.95. This revision reflects ongoing challenges within the pharmacy industry and a weaker-than-anticipated U.S. consumer environment.
• Update on Strategic Review: WBA is finalizing a comprehensive multiyear footprint optimization program aimed at closing underperforming U.S. stores. Additionally, the company is launching a U.S. Retail Pharmacy action plan to enhance customer and patient experiences across all channels. WBA is also aligning its U.S. Pharmacy and Healthcare organizations to strengthen its go-to-market strategies and focusing on simplifying its U.S. Healthcare portfolio.
• Overview of Third Quarter Results: WBA’s third quarter sales reached USD 36.4 billion, up 2.6% from the prior year quarter, driven by growth in all segments. Operating income for the quarter was USD 111 million, marking a significant improvement from the operating loss of USD 477 million in the year-ago quarter, which included a substantial non-cash impairment charge. Adjusted operating income decreased by 36.3% on a constant currency basis to USD 613 million, reflecting lower sale-leaseback gains and softer performance in U.S. retail and pharmacy sectors, partially offset by cost savings and improved profitability in the U.S. Healthcare segment.
• Overview of Fiscal 2024 Year-to-Date Results: In the first nine months of fiscal 2024, WBA reported sales of USD 110.1 billion, a 6.2% increase year-over-year, driven by growth across all segments. The company reported an operating loss of USD 13.1 billion, compared to a loss of USD 6.4 billion in the same period last year, primarily due to non-cash impairment charges related to VillageMD goodwill and certain long-lived assets in the U.S. Retail Pharmacy segment. Adjusted operating income decreased by 31.5% on a constant currency basis to USD 2.2 billion, reflecting challenges in the U.S. retail environment and lower sale-leaseback gains, partly offset by cost savings and improved profitability in the U.S. Healthcare segment. Net loss for the first nine months was USD 5.6 billion, compared to a loss of USD 2.9 billion in the prior year period, primarily due to non-cash impairment charges and the absence of gains from asset sales. Adjusted net earnings decreased by 24.9% to USD 2.2 billion, reflecting lower adjusted operating income, partly offset by a lower adjusted effective tax rate.

Technical Observation (on the daily chart):

The Relative Strength Index (RSI) over a 14-day period stands at a value of 18.64, currently inside oversold zone, with expectations of a consolidation or a reversal towards higher levels in case the price breaks on the upside above the important resistance zone of USD 11-USD 12. Additionally, the stock's current positioning is below both the 50-period SMA and 200-period EMA, which may serve as dynamic short to medium-term resistance levels.

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Buy’ rating has been given to Walgreens Boots Alliance, Inc. (NASDAQ: WBA) at the current market price of USD 10.80 as of July 09, 2024, 08:10 am PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is July 09, 2024. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.