Walgreens (WBA) stock drops despite Q3 profit, improved FY’21 outlook

July 01, 2021 08:07 AM PDT | By Kiran Murali

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Walgreens (WBA) stock drops despite Q3 profit, improved FY’21 outlook — Image source: i viewfinder, Shutterstock

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Summary

Walgreens stock plunged over 7 percent on Thursday morning.

The pharmacy chain anticipates fiscal 2021 adjusted EPS to grow around 10%.

Walgreens’ fiscal third quarter sales increased 10.4 percent to US$34.0 billion.

Walgreens Boots Alliance, Inc. (NASDAQ:WBA) stock plunged over 7 percent when the markets opened on Thursday despite strong third quarter results and an improved outlook for fiscal 2021.

As of 9.35 am ET, the Illinois-based pharmacy chain’s stock was trading at US$48.69, down 7.45 percent.

Walgreens has US$44.74 billion in market capitalization. Its stock returned approximately 32 percent year to date. The shares were trading between US$33.36 and US$57.05 in the last 52-week period.

Walgreens swings to profit in Q3

The retailer posted earnings of US$1.27 per share and adjusted EPS of US$1.38 from continuing operations in its fiscal third quarter. This compares with the loss of US$2.05 per share and adjusted loss of US$1.95 per share in the year-ago quarter.

Net earnings from continuing operations totaled US$1.1 billion, while adjusted net earnings came in at US$1.2 billion.

During the three months ended May 31, Walgreens sales grew 10.4 percent to US$34 billion. The company said it administered more than 25 million coronavirus vaccinations.

In the third quarter of the previous fiscal year, Walgreens had booked a non-cash impairment charge of US$2 billion following the COVID-19 impact on its Boots UK operations.

Source: Pixabay

Meanwhile, Walgreens completed the sale of Alliance Healthcare businesses for US$6.5 billion in the third quarter. The company repaid a debt of US$3.3 billion using the proceeds from the divestiture while it investment the rest of the proceeds in its core retail pharmacy and healthcare businesses.

Walgreens boosts full-year guidance

The retailer now expects fiscal 2021 adjusted EPS from continuing operations to grow around 10 percent in constant currency. Previously, the company projected the EPS to grow in mid-to-high single digits.

Walgreens attributed the improved guidance to strong third-quarter results and better clarity on the impact of coronavirus vaccinations.

For the full fiscal year 2020, the company had reported an adjusted EPS of US$4.74.

Walgreens also noted that it is on track to cuts costs by more than US$2 billion annual by fiscal 2022.

Please note: The above constitutes a preliminary view, and any interest in stocks/cryptocurrencies should be evaluated further from an investment point of view.

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