On Mar 16, we issued an updated research report on Walgreens Boots Alliance, Inc. (WBA - Free Report) . The company reaps benefits from its growth initiatives and major business tie-ups. However, it suffers headwinds in the form of fierce competition and tough industry conditions. The stock currently carries a Zacks Rank #3 (Hold).
Over the past three months, shares of the company have underperformed its industry. In the past three months, the stock has depreciated 21% compared with the broader market’s 19.5% fall.
Walgreens Boots put up a disappointing bottom-line performance in first-quarter fiscal 2020, largely due to persistent reimbursement pressure and adverse mix associated with brand inflation. The ongoing pharmacy trends, currently affecting the overall market, might continue to be an overhang in the coming months.
Meanwhile, tough market conditions, particularly in retail, have been inducing sluggishness in the Retail Pharmacy International division. According to Walgreens Boots, reimbursement pressure continues as opportunities for mitigation are lower than expected.
On a positive note, intensifying competition in the U.S. retail drugstore market compelled Walgreens Boots to diversify its product offerings. In this line, we are currently looking forward to Walgreens’ tie up with Alphabet’s life-sciences and healthcare segment Verily on multiple projects related to chronic ailment. This partnership aims at providing advanced healthcare outcomes to chronic conditions like diabetes at low cost of care.
Per the company’s recent partnership with Kroger, the company is working on a pilot program at select Walgreens outlets in Northern Kentucky and Tennessee. The Kroger Express concept will be applied to 50 Walgreens stores, while Walgreen’s own health and beauty brands will be available across 17 Kroger stores. The partnership has been progressing well through the reported quarter. The initial Kroger Express pilots in Northern Kentucky have been functional for just more than a year, while the pilot in Knoxville, TN was active for five months.
A few better-ranked stocks from the broader medical space are ResMed Inc. (RMD - Free Report) , Medtronic plc (MDT - Free Report) and Hill-Rom Holdings, Inc. (HRC - Free Report) .
ResMed has a projected long-term earnings growth rate of 14.4%. It currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Medtronic’s long-term earnings growth rate is estimated at 7.4%. The company presently holds a Zacks Rank of 2.
Hill-Rom’s long-term earnings growth rate is projected at 11.1%. It currently carries a Zacks Rank #2.
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