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Walgreens' Pharmacy International Arm Faces Coronavirus Woes
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On Oct 6, we issued an updated research report on Walgreens Boots Alliance, Inc. (WBA - Free Report) . The company has been reaping the benefits of its growth initiatives and major business tie-ups. However, fierce competition and tough industry conditions are concerns. The stock currently carries a Zacks Rank #5 (Strong Sell).
Over the past six months, the company has underperformed the industry it belongs to. The stock has lost 14.4% against the industry’s rise of 3.6%.
The year-over-year decline in third-quarter fiscal 2020 adjusted earnings is concerning. Challenging market conditions, particularly in retail, have been inducing sluggishness in the Retail Pharmacy International division.
Although Walgreens recorded growing demand for Retail Pharmacy & Pharmaceutical Wholesale products at quarter-end, it took into consideration a projected severe impact of the pandemic. It expects the adverse impact of COVID-19 to continue in the fiscal fourth quarter. In the U.K., it expects to see pronounced impacts where retail conditions are expected to remain depressed despite the gradual easing of restrictions. U.K. comp sales are expected to remain very weak despite the company’s projection of a year-over-year sales improvement.
Pressure on gross margin is expected to continue in the short term due to adverse category mix and higher fulfillment costs. Further, the company’s projection of U.S. script growth in the fiscal fourth quarter is expected to be below the pre-COVID rate.
A leveraged balance sheet with heavy payout load is also deterring. Tough market conditions, particularly in retail, and a tough competitive landscape are other headwinds trailing the company.
On a positive note, Walgreens’ tie-up with Alphabet’s life sciences and healthcare segment Verily on multiple projects on chronic ailment buoy optimism. The partnership aims at providing advanced healthcare outcomes to chronic conditions like diabetes at a low cost of care.
Walgreens Boots has expanded its primary care clinics by collaborating with VillageMD in the fiscal third quarter. The company recently entered into partnerships with Microsoft and Adobe to launch a world-class modern technology and customer data resource, which will form the basis of a new customer engagement platform.
In retail, Walgreens Boots upgraded its electronic accessory offerings to focus on high-quality brands that customers are seeking, including agreement with Apple to sell their branded accessories.
Further, Boots UK’s partnership with LIVI (entered in the second quarter of fiscal 2020), buoys optimism. Other significant alliances that the company formed in recent times are with Kroger, LabCorp and UnitedHealthcare.
Key Picks
A few better-ranked stocks from the broader medical space include QIAGEN N.V. (QGEN - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and Globus Medical, Inc. (GMED - Free Report) .
Thermo Fisher’s long-term earnings growth rate is estimated at 15.5%. It currently sports a Zacks Rank #1.
Globus Medical’s long-term earnings growth rate is estimated at 13%. The company presently carries a Zacks Rank #2.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
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Walgreens' Pharmacy International Arm Faces Coronavirus Woes
On Oct 6, we issued an updated research report on Walgreens Boots Alliance, Inc. (WBA - Free Report) . The company has been reaping the benefits of its growth initiatives and major business tie-ups. However, fierce competition and tough industry conditions are concerns. The stock currently carries a Zacks Rank #5 (Strong Sell).
Over the past six months, the company has underperformed the industry it belongs to. The stock has lost 14.4% against the industry’s rise of 3.6%.
The year-over-year decline in third-quarter fiscal 2020 adjusted earnings is concerning. Challenging market conditions, particularly in retail, have been inducing sluggishness in the Retail Pharmacy International division.
Although Walgreens recorded growing demand for Retail Pharmacy & Pharmaceutical Wholesale products at quarter-end, it took into consideration a projected severe impact of the pandemic. It expects the adverse impact of COVID-19 to continue in the fiscal fourth quarter. In the U.K., it expects to see pronounced impacts where retail conditions are expected to remain depressed despite the gradual easing of restrictions. U.K. comp sales are expected to remain very weak despite the company’s projection of a year-over-year sales improvement.
Walgreens Boots Alliance, Inc. Price
Walgreens Boots Alliance, Inc. price | Walgreens Boots Alliance, Inc. Quote
Pressure on gross margin is expected to continue in the short term due to adverse category mix and higher fulfillment costs. Further, the company’s projection of U.S. script growth in the fiscal fourth quarter is expected to be below the pre-COVID rate.
A leveraged balance sheet with heavy payout load is also deterring. Tough market conditions, particularly in retail, and a tough competitive landscape are other headwinds trailing the company.
On a positive note, Walgreens’ tie-up with Alphabet’s life sciences and healthcare segment Verily on multiple projects on chronic ailment buoy optimism. The partnership aims at providing advanced healthcare outcomes to chronic conditions like diabetes at a low cost of care.
Walgreens Boots has expanded its primary care clinics by collaborating with VillageMD in the fiscal third quarter. The company recently entered into partnerships with Microsoft and Adobe to launch a world-class modern technology and customer data resource, which will form the basis of a new customer engagement platform.
In retail, Walgreens Boots upgraded its electronic accessory offerings to focus on high-quality brands that customers are seeking, including agreement with Apple to sell their branded accessories.
Further, Boots UK’s partnership with LIVI (entered in the second quarter of fiscal 2020), buoys optimism. Other significant alliances that the company formed in recent times are with Kroger, LabCorp and UnitedHealthcare.
Key Picks
A few better-ranked stocks from the broader medical space include QIAGEN N.V. (QGEN - Free Report) , Thermo Fisher Scientific Inc. (TMO - Free Report) and Globus Medical, Inc. (GMED - Free Report) .
QIAGEN’s long-term earnings growth rate is estimated at 22.3%. It currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Thermo Fisher’s long-term earnings growth rate is estimated at 15.5%. It currently sports a Zacks Rank #1.
Globus Medical’s long-term earnings growth rate is estimated at 13%. The company presently carries a Zacks Rank #2.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 8 stocks to watch. The report is only available for a limited time.
See 8 breakthrough stocks now>>