On Monday, Mizuho (NYSE:MFG) Securities maintained its Neutral rating on Walgreens Boots Alliance (NASDAQ:WBA) shares, with a set price target of $10.00. The decision followed the company's release of its first-quarter fiscal year 2025 earnings, which exceeded consensus estimates.
Walgreens reported an adjusted earnings per share (EPS) of $0.51, surpassing the expected figure by 34.2%. Despite this performance, the company chose not to revise its full-year adjusted EPS forecast, which remains at $1.40-$1.80. This projection aligns with Mizuho's estimate of $1.75 and exceeds the consensus of $1.53.
The company's choice to maintain its guidance was not unexpected, considering previous operational challenges and the early stage of the fiscal year. However, the first-quarter results have bolstered confidence that Walgreens is capable of not only meeting but potentially exceeding the midpoint to the higher end of its guidance range. Such an outcome would likely have a favorable impact on investor sentiment towards the stock.
Walgreens' first-quarter performance appears to have surpassed the conservative expectations held by investors. While the company still reported negative free cash flow, the figure for the quarter showed a marked improvement. The reported negative free cash flow of $424 million was a significant step up from the negative $788 million recorded in the first quarter of fiscal year 2024.
The financial results from Walgreens come at a time when the retail pharmacy sector is navigating a complex and evolving healthcare landscape. Despite the challenges, the company's ability to outperform estimates and improve its cash flow situation could signal a positive direction for its operational strategies moving forward.
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