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On Jan 22, we issued an updated research report on Walgreens Boots Alliance, Inc. (WBA - Free Report) . The stock carries a Zacks Rank #3 (Hold).
This leading pharmacy-led, health and wellbeing company has been trading above the broader industry over the past three months. The stock has gained 14.5% in comparison to the broader industry’s 9.1%.
Walgreens Boots reported an impressive first quarter of fiscal 2018. We are encouraged by the strength in the Retail Pharmacy USA division and the continued prescription growth on account of Medicare Part D growth and volume growth from previously announced strategic pharmacy collaborations.
We are particularly upbeat about the revised Rite Aid store deal for which the company received regulatory approval last September. Per Walgreens Boots, the modified buyout contract will help it boost the top line and also gain operational benefits. It will also help the company expand and optimize retail pharmacy network in key U.S. markets, including the Northeast. Notably, the stores to be purchased are located primarily in the Northeast and Southern United States, while the three distribution centers to be bought are located in Dayville, CT; Philadelphia, PA; and Spartanburg, SC. Post the transaction’s initial closing, synergies of $300 million are expected to be realized within four years.
Moreover, increase in Retail Pharmacy International sales buoys optimism. Also, we are upbeat about the company’s decision to acquire a 40% stake in Sinopharm Holding Guoda Drugstores in China. This should provide a strong impetus to Walgreens Boots’ worldwide retail pharmacy business. Moreover, the company’s acceptance of the proposal to sell part of its investment in Chinese wholesale partner Guangzhou Pharmaceuticals Corporation for a huge amount of cash is a major positive.
However, Walgreens Boots faces headwinds in the form of increased competition and tough industry conditions. Even though the company continues to gain traction, major mass merchants are expanding their pharmacy businesses and enjoying a fair market share.
Moreover, over the last few years, slowdown in generic introduction has been affecting Walgreens Boots’ margins. In addition, increased reimbursement pressure and generic drug cost inflation have been hampering Walgreens Boots’ margins significantly.
Key Picks
A few better-ranked stocks in the broader medical sector are Amedisys (AMED - Free Report) , Bio-Rad Laboratories (BIO - Free Report) and Intuitive Surgical (ISRG - Free Report) .
Amedisys has a long-term expected earnings growth rate of 18.5%. The stock carries a Zacks Rank #2 (Buy).
Intuitive Surgical has a long-term expected earnings growth rate of 10.7%. The stock carries a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Walgreens Boots' Retail Pharmacy Strong, Competition Rife
On Jan 22, we issued an updated research report on Walgreens Boots Alliance, Inc. (WBA - Free Report) . The stock carries a Zacks Rank #3 (Hold).
This leading pharmacy-led, health and wellbeing company has been trading above the broader industry over the past three months. The stock has gained 14.5% in comparison to the broader industry’s 9.1%.
Walgreens Boots reported an impressive first quarter of fiscal 2018. We are encouraged by the strength in the Retail Pharmacy USA division and the continued prescription growth on account of Medicare Part D growth and volume growth from previously announced strategic pharmacy collaborations.
We are particularly upbeat about the revised Rite Aid store deal for which the company received regulatory approval last September. Per Walgreens Boots, the modified buyout contract will help it boost the top line and also gain operational benefits. It will also help the company expand and optimize retail pharmacy network in key U.S. markets, including the Northeast. Notably, the stores to be purchased are located primarily in the Northeast and Southern United States, while the three distribution centers to be bought are located in Dayville, CT; Philadelphia, PA; and Spartanburg, SC. Post the transaction’s initial closing, synergies of $300 million are expected to be realized within four years.
Moreover, increase in Retail Pharmacy International sales buoys optimism. Also, we are upbeat about the company’s decision to acquire a 40% stake in Sinopharm Holding Guoda Drugstores in China. This should provide a strong impetus to Walgreens Boots’ worldwide retail pharmacy business. Moreover, the company’s acceptance of the proposal to sell part of its investment in Chinese wholesale partner Guangzhou Pharmaceuticals Corporation for a huge amount of cash is a major positive.
However, Walgreens Boots faces headwinds in the form of increased competition and tough industry conditions. Even though the company continues to gain traction, major mass merchants are expanding their pharmacy businesses and enjoying a fair market share.
Moreover, over the last few years, slowdown in generic introduction has been affecting Walgreens Boots’ margins. In addition, increased reimbursement pressure and generic drug cost inflation have been hampering Walgreens Boots’ margins significantly.
Key Picks
A few better-ranked stocks in the broader medical sector are Amedisys (AMED - Free Report) , Bio-Rad Laboratories (BIO - Free Report) and Intuitive Surgical (ISRG - Free Report) .
Bio-Rad Laboratories flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The company has a long-term expected earnings growth rate of 25%.
Amedisys has a long-term expected earnings growth rate of 18.5%. The stock carries a Zacks Rank #2 (Buy).
Intuitive Surgical has a long-term expected earnings growth rate of 10.7%. The stock carries a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >