On Friday, TD Cowen reaffirmed its Buy rating on Walgreens Boots Alliance (NASDAQ:WBA) with a consistent price target of $16.00. The focus, according to the firm, is less on the quarterly earnings estimates, where they anticipate $0.37 per share compared to the consensus of $0.36, and more on the long-term outlook. Specifically, the attention is directed towards the fiscal year 2025 adjusted earnings per share (EPS) guidance, which TD Cowen estimates at $1.71.
The analyst highlighted the importance of management's strategy for fiscal year 2025 cash flows. Additionally, expectations are set for Walgreens management to provide more detailed information regarding the company's store closure and optimization plan during their updates.
TD Cowen also pointed out that the areas to watch include the progress of negotiations with payors and the timeline for a potential sale of VillageMD. These factors are considered crucial elements that could impact Walgreens' future performance and strategic direction.
The reaffirmation of the Buy rating and price target reflects TD Cowen's continued confidence in the company amidst its ongoing business developments and strategic plans. The detailed forecast and expectations set forth by the firm serve as key indicators for investors monitoring Walgreens' performance and prospects.
In other recent news, Walgreens Boots Alliance is approaching its fourth-quarter earnings release for fiscal year 2024, with revenues anticipated to be around $35.5 billion and an adjusted earnings per share of $0.34. Leerink Partners maintained its Market Perform rating on Walgreens, forecasting a $1.49 earnings per share for Walgreens' fiscal year 2025, significantly below the current consensus of $1.79.
Meanwhile, Deutsche Bank revised its price target for Walgreens' stock to $11, maintaining a Hold rating, and JPMorgan sustained an Overweight rating on Walgreens shares.
In leadership changes, Walgreens announced the appointment of Jason Stenta as Senior Vice President and Chief Commercial Officer, Tracey Koller as Chief Merchandising Officer, and Sharmila Sudhakar as Group Vice President and Head of Digital Commerce. These appointments are part of the company's business-to-business growth strategy.
In financial developments, Walgreens completed a public offering of $750 million in notes with an 8.125% yield, set to mature in 2029. The company has also partnered with the Biomedical Advanced Research and Development Authority to advance decentralized clinical trials and has been awarded up to $25 million to conduct a Phase IV observational study on COVID-19 vaccine effectiveness.
InvestingPro Insights
To enrich the analysis provided by TD Cowen, let's consider some key financial metrics from InvestingPro. Walgreens Boots Alliance currently has a market capitalization of $7.8 billion, significantly below its revenue of $145.53 billion for the last twelve months as of Q3 2024. This disparity highlights the challenging environment the company is facing, which aligns with TD Cowen's focus on the long-term outlook rather than quarterly results.
The company's Price to Book ratio of 0.57 suggests that the stock may be undervalued relative to its book value, potentially supporting TD Cowen's Buy rating. However, investors should note that Walgreens' negative P/E ratio of -10.51 indicates recent profitability challenges, which may explain the analyst's emphasis on future cash flows and the store optimization plan.
InvestingPro Tips further illuminate the company's situation:
1. Walgreens has a high dividend yield of 11.07%, which could be attractive to income-focused investors, but this should be viewed cautiously given the negative dividend growth of -47.92%.
2. The company's revenue growth has been positive, with a 6.92% increase over the last twelve months, suggesting that despite challenges, Walgreens is still expanding its top line.
These insights complement TD Cowen's analysis by providing additional context on Walgreens' financial health and market position. For investors seeking a more comprehensive understanding, InvestingPro offers 16 additional tips for Walgreens Boots Alliance, which could be valuable for assessing the company's potential in light of the upcoming fiscal year 2025 guidance and strategic initiatives.
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