Leerink Swann reissued a “buy” rating on shares of Walgreens Boots Alliance in a research note on Monday, November 16th.
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Walgreens Boots Alliance Inc. beat analysts’ earnings estimates of fiscal first-quarter earnings estimates, as strong prescription drug trends made up for a retail slump that continues to affect the company.
Even though the company is optimistic about its performance, and feels that it is on track to deliver beyond its targets, investors aren’t thoroughly impressed with the latest financial report.
Earnings easily came out ahead of expectations, rising 27% to $1.03 a share, vs. views for 96 cents.
Walgreens Boots Alliance Inc.’s plan to renovate its stores and draw in more shoppers to boost retail sales still isn’t paying off.
Additionally, the company raised its fiscal 2016 earnings guidance to $4.30 per share to $4.55 per share, versus its previous guidance of $4.25 per share to $4.55 per share.
Walgreens Boots Alliance disclosed that its first quarter net sales increased 48.5% to $29.0 billion compared with the same quarter a year ago, largely due to the inclusion of Alliance Boots consolidated results. Following the purchase, the director now owns 20,000 shares of the company’s stock, valued at $1,697,600.
In a first quarter trading update released by Walgreens Boots Alliance yesterday the group said its operations in the United Kingdom grew, supported by continued growth of its online operations. Comparable pharmacy sales increased 3.8 percent and comparable retail sales increased 1.3 percent in the quarter compared with the same period a year ago.
Executive vice chairman and CEO Stefano Pessina said: “The year has started with a comparatively strong first quarter, as we expected”. However, as expected, adjusted gross margin contracted 130 basis points (bps) to 26%, on account of lower pharmacy reimbursement rates, an increase in Medicare Part D prescriptions and the mix of specialty medications.
Precise comparisons are hard because the merger between Alliance Boots and American drug store giant Walgreens only completed at the end of December 2014.
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WBA has been the topic of several other research reports. Rite Aid shareholders will vote on the offer next month, and Walgreens still expects to close the deal in the second half of this year. Rite Aid has scheduled a special meeting of its stockholders for Feb 4, 2016 to, among other things, consider and vote on a proposal to approve the agreement and plan of merger related to the impending acquisition. (NASDAQ:WBA) is a holding company.
