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Walgreens (WBA) to Report Q1 Earnings: What's in the Cards?
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Walgreens Boots Alliance, Inc. (WBA - Free Report) is slated to release first-quarter fiscal 2024 results on Jan 04, before market open.
In the fourth quarter of fiscal 2023, the company missed earnings estimates by 1.5%. 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 0.20%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Similar to the last few quarters, Walgreens' business is likely to have been impacted by lower COVID-19 contributions, lower sale-leaseback and a higher tax rate. The slowdown in generic introduction is likely to affect Walgreens’ margins. Also, increased reimbursement pressure and generic drug cost inflation are expected to have impacted the company’s margin on a significant level. The ongoing inflationary cost pressures and supply chain disruptions are also likely to have a negative impact on Walgreens’ business performance in the fiscal first quarter of 2024.
On the positive side, the company is likely to have gained from successful executions of growth strategies on the United States and the international fronts. Through its focused investments, Walgreens returned an incremental 300 stores to normal pharmacy operating hours and optimized hours at an additional 500 stores. WBA is operating its ninth automated micro-fulfillment center, now supporting a total of about 3,900 stores. This is likely to have benefited the company’s top line in the fiscal first quarter.
In September 2023, Walgreens partnered with Pearl Health to accelerate the expansion of value-based care in collaboration with community-based primary care physicians. This strategic pact is likely to have positively contributed to the company’s fiscal first-quarter performance, thus adding to the top line.
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 first quarter.
Lately, Walgreens stated that it has launched Future Renew, a range of innovative new skincare products, with very positive consumer responses. The company launched multiple programs across its pharmacy and U.S. healthcare business and continued to see engagement from payers and partners for clinical quality initiatives that leverage its integrated assets. 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 9.2%, driven by brand inflation, mix impacts and comp script growth. This is likely to have continued through the fiscal first quarter as well.
The Zacks Consensus Estimate suggests that Walgreens’ U.S. Healthcare business will register an increase of 105.7% in the fiscal first quarter.
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 first quarter, banking on continued positive trends globally.
Walgreens Boots Alliance, Inc. Price and EPS Surprise
During third-quarter fiscal 2023, Horizon Blue Cross Blue Shield signed on as the fourth payor partner for Walgreens Health. Shields and CareCentrix recently contracted with a leading national health solution and care delivery organization. Shields also added six new health system partners this year. Walgreens Boots partnered with TelePharm to expand tele-pharmacy services, improve access to care and provide flexibility for how and when patients engage with the pharmacists. This development is expected to have boosted the company’s revenues in the quarter to be reported.
The Zacks Consensus Estimates suggests that the Walgreens International business will likely register an increase of 3.7% in the fiscal first quarter.
Estimates
For first-quarter 2024, the Zacks Consensus Estimate for total revenues is pegged at $34.92 billion. The projection indicates a 4.6% rise from the prior-year comparable quarter’s reported figure. The consensus mark for earnings is pegged at 66 cents, suggesting a 43.1% 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 -0.91%. 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.
The company’s shares have gained 37.6% in the past three months. PODD’s earnings beat estimates by 77.5% in the last reported quarter. It has a four-quarter average earnings surprise of 105.14%.
PetIQ (PETQ - Free Report) has an Earnings ESP of +12.28% and a Zacks Rank of 2.
The stock has gained 0.6% in the past three months. PETQ’s earnings beat estimates in the last reported quarter. PetIQ has a training four-quarter average earnings surprise of 360.75%.
HealthEquity (HQY - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank of 2.
The stock has gained 7.6% year to date. HQY’s earnings beat estimates in the last reported quarter. HealthEquity has a four-quarter average earnings surprise of 16.50%.
Image: Bigstock
Walgreens (WBA) to Report Q1 Earnings: What's in the Cards?
Walgreens Boots Alliance, Inc. (WBA - Free Report) is slated to release first-quarter fiscal 2024 results on Jan 04, before market open.
In the fourth quarter of fiscal 2023, the company missed earnings estimates by 1.5%. 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 0.20%.
Let’s look at how things have shaped up before this announcement.
Factors at Play
Similar to the last few quarters, Walgreens' business is likely to have been impacted by lower COVID-19 contributions, lower sale-leaseback and a higher tax rate. The slowdown in generic introduction is likely to affect Walgreens’ margins. Also, increased reimbursement pressure and generic drug cost inflation are expected to have impacted the company’s margin on a significant level. The ongoing inflationary cost pressures and supply chain disruptions are also likely to have a negative impact on Walgreens’ business performance in the fiscal first quarter of 2024.
On the positive side, the company is likely to have gained from successful executions of growth strategies on the United States and the international fronts. Through its focused investments, Walgreens returned an incremental 300 stores to normal pharmacy operating hours and optimized hours at an additional 500 stores. WBA is operating its ninth automated micro-fulfillment center, now supporting a total of about 3,900 stores. This is likely to have benefited the company’s top line in the fiscal first quarter.
In September 2023, Walgreens partnered with Pearl Health to accelerate the expansion of value-based care in collaboration with community-based primary care physicians. This strategic pact is likely to have positively contributed to the company’s fiscal first-quarter performance, thus adding to the top line.
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 first quarter.
Lately, Walgreens stated that it has launched Future Renew, a range of innovative new skincare products, with very positive consumer responses. The company launched multiple programs across its pharmacy and U.S. healthcare business and continued to see engagement from payers and partners for clinical quality initiatives that leverage its integrated assets. 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 9.2%, driven by brand inflation, mix impacts and comp script growth. This is likely to have continued through the fiscal first quarter as well.
The Zacks Consensus Estimate suggests that Walgreens’ U.S. Healthcare business will register an increase of 105.7% in the fiscal first quarter.
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 first quarter, banking on continued positive trends globally.
Walgreens Boots Alliance, Inc. Price and EPS Surprise
Walgreens Boots Alliance, Inc. price-eps-surprise | Walgreens Boots Alliance, Inc. Quote
During third-quarter fiscal 2023, Horizon Blue Cross Blue Shield signed on as the fourth payor partner for Walgreens Health. Shields and CareCentrix recently contracted with a leading national health solution and care delivery organization. Shields also added six new health system partners this year. Walgreens Boots partnered with TelePharm to expand tele-pharmacy services, improve access to care and provide flexibility for how and when patients engage with the pharmacists. This development is expected to have boosted the company’s revenues in the quarter to be reported.
The Zacks Consensus Estimates suggests that the Walgreens International business will likely register an increase of 3.7% in the fiscal first quarter.
Estimates
For first-quarter 2024, the Zacks Consensus Estimate for total revenues is pegged at $34.92 billion. The projection indicates a 4.6% rise from the prior-year comparable quarter’s reported figure. The consensus mark for earnings is pegged at 66 cents, suggesting a 43.1% 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 -0.91%. 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.
Insulet (PODD - Free Report) has an Earnings ESP of +5.08% and a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company’s shares have gained 37.6% in the past three months. PODD’s earnings beat estimates by 77.5% in the last reported quarter. It has a four-quarter average earnings surprise of 105.14%.
PetIQ (PETQ - Free Report) has an Earnings ESP of +12.28% and a Zacks Rank of 2.
The stock has gained 0.6% in the past three months. PETQ’s earnings beat estimates in the last reported quarter. PetIQ has a training four-quarter average earnings surprise of 360.75%.
HealthEquity (HQY - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank of 2.
The stock has gained 7.6% year to date. HQY’s earnings beat estimates in the last reported quarter. HealthEquity has a four-quarter average earnings surprise of 16.50%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.