On Thursday, Walgreens Boots Alliance (NASDAQ:WBA) maintained its Buy rating according to TD Cowen, despite a reported shortfall in its fiscal third-quarter adjusted earnings per share (EPS), which came in at $0.63 compared to the consensus estimate of $0.69. The company also adjusted its fiscal year 2024 earnings guidance, narrowing it to a range of $2.80 to $2.95 from the previous forecast of $3.20 to $3.35.
The adjusted forecast takes into account ongoing challenges faced by the retail pharmacy sector. This revision suggests an anticipated fiscal fourth-quarter 2024 adjusted EPS of $0.31 to $0.46, which is notably lower than the consensus estimate of $0.66. The forthcoming earnings call is expected to shed light on the company's strategic review and the potential for margin improvements in the ensuing years.
TD Cowen's reiteration of the $35.00 price target on Walgreens Boots Alliance stock comes amidst these developments, indicating the firm's continued optimism about the company's long-term prospects despite the near-term earnings pressure and the revised guidance for the upcoming fiscal quarter.
The company's strategic review update is particularly significant as investors and analysts alike will be keen to understand the measures Walgreens plans to implement in order to address the challenges it faces and to improve margins going forward.
In other recent news, Walgreens Boots Alliance released its second-quarter 2024 earnings, reporting an adjusted earnings per share (EPS) of $1.20 and adjusting its full-year EPS guidance to $3.20 to $3.35. In response to these developments, several analyst firms have updated their outlook on the company. Mizuho maintained a Neutral rating but lowered the price target to $19, citing concerns over lower earnings visibility. Truist Securities also revised its price target for Walgreens to $20, maintaining a Hold rating, while TD Cowen reduced the stock's price target to $35 but retained a Buy rating. Morgan Stanley (NYSE:MS), on the other hand, cut its price target to $20, keeping an Underweight rating on the stock.
In addition to these analyst updates, Walgreens Boots Alliance announced that its board of directors has approved the issuance of a quarterly dividend of $0.25 per share, continuing a 91-year tradition of providing dividends to its shareholders.
InvestingPro Insights
Amidst the challenges outlined for Walgreens Boots Alliance, real-time data from InvestingPro presents a mixed financial portrait. The company's market capitalization stands at a robust $13.51 billion, indicating significant scale in the retail pharmacy sector. A noteworthy metric is the company's revenue, which for the last twelve months as of Q2 2024, totals an impressive $144.6 billion, with a growth rate of 8.48%. This growth is a positive sign, reflecting the company's ability to increase sales despite the industry's hurdles.
InvestingPro Tips highlight the dividend yield of 6.39%, which may be appealing to income-focused investors, especially in a volatile market. Additionally, the fair value estimates, with analysts targeting $21 and InvestingPro's own fair value calculation at $19.86, suggest that the current price may offer a potential upside. For those considering a deeper dive into Walgreens Boots Alliance's financials, InvestingPro offers additional tips to guide investment decisions. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to the suite of tools and insights that InvestingPro provides, including several more InvestingPro Tips related to WBA.
While the recent earnings revision and the subsequent stock price movement may cause concern, these InvestingPro metrics and tips offer a broader context for understanding Walgreens' financial health and potential investment value.
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