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Walgreens Boots Alliance, Inc. (NASDAQ: WBA) has been a major contributor to the COVID-19 vaccination campaign, supported by an extensive retail network. The drugstore chain is currently trying to diversify and expand its portfolio by investing heavily in its core business and new ventures. The plan is to continue capital deployment in 2023 and beyond, when the economy is experiencing uncertainty and inflation is affecting personal finances.
The Deerfield-headquartered company, which sells prescription and OTC drugs to retail customers and offers technology-enabled health care, last year acquired primary care provider Summit Health-City MD through VillageMD, in which the company owns a majority stake.
Evaluation of Dips
Walgreens stock rebounded from a few years ago after announcing fourth-quarter results in mid-October, but gave up some of those gains in recent weeks, ahead of this week’s earnings. Currently, there are almost no positive factors indicating a rebound, which means that this is not the right time to invest. But Walgreens is the market leader in retail pharmacy and is expected to continue to grow the business. The pandemic has made health a top priority for most people, with social and economic uncertainty increasing the importance of staying healthy.
Walgreens Boots Alliance Q4 2022 Earnings Call Transcript
Although it is not easy to predict where the stock is headed in 2023, the fundamentals are strong enough to revive the company’s market price if external conditions improve. In addition, WBA has an impressive dividend yield of around 5%, which increases its prospects as a reliable long-term investment. So, it goes without saying that selling stocks right now is not a good idea.
Recently, Walgreens’ margins have been under pressure and it has seen a decline in sales that appears to be the new fiscal year. Experts predict a decline in first-quarter sales to around $33 billion. There will be a corresponding decrease in adjusted profit, which is expected to come in at $1.13 per share. Results will be released on Thursday before regular trading begins.
Ends FY22 on a Low Note
In the fourth quarter of 2022, broad-based weakness across all geographies resulted in sales falling 5% to $32.4 billion. Consequently, earnings, adjusted for special items, plunged to $0.80 per share. Interestingly, in the last quarter, the company’s profit and loss were mostly in the upper estimate.
From the Walgreens Boots Alliance Q4 2022 earnings call:
“With inflation at a four-decade high, consumers are expressing uncertainty about the future and looking for value. At the same time, we know that health and well-being will be a priority, and increased after COVID-19. A McKinsey study from last month showed that about 50% of US consumers now report health as a top priority in their daily lives, a significant increase from 42% just two years ago. We use our footprint, digital capabilities, consumer insights, and our essential services to drive overall retail pharmacy growth.
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WBA traded down 1% on Tuesday afternoon, continuing its recent weakness. Trading below its long-term average, the stock is now largely at the level it was around six months ago.
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