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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 2023 results on Jan 05, before market open.
In the fiscal fourth quarter, the company delivered an earnings surprise of 2.6%. WBA’s earnings outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.61%.
Let’s look at how things have shaped up prior to this announcement.
Factors at Play
Walgreens is likely to have gained from continued strategic executions on both the United States and the international front. The quarter’s top line is likely to have benefited from the launch of a clinical trial business, which is expected to enhance the company’s participation, especially among diverse populations, while supporting sponsors in meeting the trial goal. The top line is likely to have benefited from the new Walgreens Health business, which brings equitable, personalized, whole-person healthcare to local communities across America.
During fourth-quarter earnings call, the company noted that it recognized meaningful contributions from alternative profit streams for fiscal 2022, including Walgreen’s advertising group, with 35% growth. This is expected to have continued during the first quarter of fiscal 2023.
In December 2022, Walgreens sold $0.8 billion shares of AmerisourceBergen Corporation subject to the completion of the Rule 144 sale, a concurrent share repurchase by AmerisourceBergen for proceeds of approximately $0.2 billion. The proceeds will be used primarily for debt paydown and the funding of the company’s strategic priorities, including the definitive agreement for VillageMD to acquire Summit Health-CityMD. This strategic development is likely to have contributed to the company’s fiscal first-quarter performance and improved its debt position.
United States
Walgreens is likely to have registered growth in U.S. retail pharmacy business, banking on resurging demand for vaccinations and tests amid the spread of new virus variants through the months of the fiscal first quarter. The company administered 35 million vaccinations in fiscal 2022, well beyond its expectation. Moreover, the company’s expanded access to offering Pixel by Labcorp and at-home PCR kits at no cost through curbside and in-store pickup has been seen to gain strong customer acceptance over the past few months. This, too, should have contributed to the top line in the fiscal first quarter.
Walgreens Boots Alliance, Inc. Price and EPS Surprise
In the United States, Walgreens’ retail business continued to witness impressive momentum through digital and omnichannel growth from the myWalgreens loyalty program, owned brand innovation and other profit streams. In the fiscal fourth quarter, U.S. digital sales grew 37% on top of 74% growth a year ago. These developments are likely to have contributed to Walgreens’ fiscal first-quarter revenues.
In fiscal 2022, Walgreens Boots has added three strategic partners for Walgreens Health, Blue Shield of California, Clover and Buckeye, bringing the number of lives covered above the calendar year 2022 end target of 2 million. This development is likely to benefit company’s top line in the to-be-reported quarter.
International
In the last reported quarter, the international business registered an ongoing rebound and strong execution across its retail portfolio, particularly in Boots U.K. and growth in the German wholesale business. The trend is expected to have continued in the fiscal first quarter, banking on strong demand for COVID-19 and monkeypox testing and vaccinations, online healthcare services and beauty brands.
In the fiscal fourth quarter, sales increased 6.6% year over year, reflecting growth across all international markets, with Boots UK advancing 6% and Germany wholesale growing 6.8%. Walgreens noted that the integration of the wholesale business in Germany remained on track, with operational synergy gains coming ahead of schedule. This development is expected to have accelerated international businesses in the to-be-reported quarter.
Walgreens Health
The Walgreens Health segment is likely to have gained from its majority investments in Shields Health and VillageMD. VillageMD is leading the way in value-based care for the nation, with over 340 clinics now open, including about 150 co-located with Walgreens. In the fiscal fourth quarter, Shields delivered pro forma sales growth of 48%. VillageMD and Shields are expected to have driven pro-forma sales growth in the to-be-reported quarter on the back of annualizing recent contract wins and expanding their value proposition with existing health system partners.
Estimates
For first-quarter 2023, the Zacks Consensus Estimate for total revenues of $32.96 billion indicates a 2.8% dip from the prior-year comparable quarter’s reported figure. The consensus mark for earnings is pegged at $1.14, suggesting a 32.1% decline year on year.
What Our Model Suggests
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chance of beating estimates. That is not the case here, as you can see:
Earnings ESP: Walgreens has an Earnings ESP of -4.70%. 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 #2 (Buy).
Other Stocks Worth a Look
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 10.6% compared with the industry’s 30.3% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6.8% against the industry’s 42.6% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 13.7% against the industry’s 8.7% decline over the past year.
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 2023 results on Jan 05, before market open.
In the fiscal fourth quarter, the company delivered an earnings surprise of 2.6%. WBA’s earnings outperformed the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 10.61%.
Let’s look at how things have shaped up prior to this announcement.
Factors at Play
Walgreens is likely to have gained from continued strategic executions on both the United States and the international front. The quarter’s top line is likely to have benefited from the launch of a clinical trial business, which is expected to enhance the company’s participation, especially among diverse populations, while supporting sponsors in meeting the trial goal. The top line is likely to have benefited from the new Walgreens Health business, which brings equitable, personalized, whole-person healthcare to local communities across America.
During fourth-quarter earnings call, the company noted that it recognized meaningful contributions from alternative profit streams for fiscal 2022, including Walgreen’s advertising group, with 35% growth. This is expected to have continued during the first quarter of fiscal 2023.
In December 2022, Walgreens sold $0.8 billion shares of AmerisourceBergen Corporation subject to the completion of the Rule 144 sale, a concurrent share repurchase by AmerisourceBergen for proceeds of approximately $0.2 billion. The proceeds will be used primarily for debt paydown and the funding of the company’s strategic priorities, including the definitive agreement for VillageMD to acquire Summit Health-CityMD. This strategic development is likely to have contributed to the company’s fiscal first-quarter performance and improved its debt position.
United States
Walgreens is likely to have registered growth in U.S. retail pharmacy business, banking on resurging demand for vaccinations and tests amid the spread of new virus variants through the months of the fiscal first quarter. The company administered 35 million vaccinations in fiscal 2022, well beyond its expectation. Moreover, the company’s expanded access to offering Pixel by Labcorp and at-home PCR kits at no cost through curbside and in-store pickup has been seen to gain strong customer acceptance over the past few months. This, too, should have contributed to the top line in the fiscal first quarter.
Walgreens Boots Alliance, Inc. Price and EPS Surprise
Walgreens Boots Alliance, Inc. price-eps-surprise | Walgreens Boots Alliance, Inc. Quote
In the United States, Walgreens’ retail business continued to witness impressive momentum through digital and omnichannel growth from the myWalgreens loyalty program, owned brand innovation and other profit streams. In the fiscal fourth quarter, U.S. digital sales grew 37% on top of 74% growth a year ago. These developments are likely to have contributed to Walgreens’ fiscal first-quarter revenues.
In fiscal 2022, Walgreens Boots has added three strategic partners for Walgreens Health, Blue Shield of California, Clover and Buckeye, bringing the number of lives covered above the calendar year 2022 end target of 2 million. This development is likely to benefit company’s top line in the to-be-reported quarter.
International
In the last reported quarter, the international business registered an ongoing rebound and strong execution across its retail portfolio, particularly in Boots U.K. and growth in the German wholesale business. The trend is expected to have continued in the fiscal first quarter, banking on strong demand for COVID-19 and monkeypox testing and vaccinations, online healthcare services and beauty brands.
In the fiscal fourth quarter, sales increased 6.6% year over year, reflecting growth across all international markets, with Boots UK advancing 6% and Germany wholesale growing 6.8%. Walgreens noted that the integration of the wholesale business in Germany remained on track, with operational synergy gains coming ahead of schedule. This development is expected to have accelerated international businesses in the to-be-reported quarter.
Walgreens Health
The Walgreens Health segment is likely to have gained from its majority investments in Shields Health and VillageMD. VillageMD is leading the way in value-based care for the nation, with over 340 clinics now open, including about 150 co-located with Walgreens. In the fiscal fourth quarter, Shields delivered pro forma sales growth of 48%. VillageMD and Shields are expected to have driven pro-forma sales growth in the to-be-reported quarter on the back of annualizing recent contract wins and expanding their value proposition with existing health system partners.
Estimates
For first-quarter 2023, the Zacks Consensus Estimate for total revenues of $32.96 billion indicates a 2.8% dip from the prior-year comparable quarter’s reported figure. The consensus mark for earnings is pegged at $1.14, suggesting a 32.1% decline year on year.
What Our Model Suggests
Per our proven model, a stock with the combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has higher chance of beating estimates. That is not the case here, as you can see:
Earnings ESP: Walgreens has an Earnings ESP of -4.70%. 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 #2 (Buy).
Other Stocks Worth a Look
Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , Boston Scientific Corporation (BSX - Free Report) and Merit Medical Systems, Inc. (MMSI - Free Report) .
AMN Healthcare, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AMN Healthcare has lost 10.6% compared with the industry’s 30.3% decline in the past year.
Boston Scientific, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 10.3%. BSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average beat being 1.9%.
Boston Scientific has gained 6.8% against the industry’s 42.6% decline over the past year.
Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.
Merit Medical has gained 13.7% against the industry’s 8.7% decline over the past year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.