Walgreens Stock Is Dropping Despite Strong Earnings

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Walgreens proceeds to advantage from administering vaccines for Covid-19.


Joe Raedle/Getty Photos


Walgreens Boots Alliance

reported larger earnings than Wall Street envisioned and lifted its economical forecast for the 12 months, but it was not enough to preserve the inventory in good territory.


Walgreens Boots Alliance

(ticker: WBA) shares ended up up 2.2% in the early premarket several hours, just before slipping again for a loss of 6.7% as normal buying and selling began. Shares are up about 23% so much this 12 months.

The stock is making a stunning comeback in 2021. Walgreens shares fell 32.4% past calendar year, producing it the 2nd-worst performer in the

Dow Jones Industrial Regular.

This year, it was the third best, powering

Goldman Sachs Group

(GS) and

American Express

(AXP), as of the near of trading on Wednesday.

In its earnings report Thursday early morning, the firm claimed it now expects 10% growth in altered for every-share earnings from continuing operations in 2021. That is up from its last earnings report, when it claimed it envisioned “mid-to-substantial solitary digit advancement.”

The Wall Street consensus sees Walgreens earnings slipping 1.1% from previous year’s levels, according to FactSet.

Walgreens documented adjusted earnings for the 3rd quarter of its fiscal 12 months of $1.51 for each share, beating the FactSet consensus estimate of $1.16 for every share. The corporation noted gross sales of $34 billion, earlier mentioned the FactSet consensus estimate of $33.5 billion.

In a observe out early Thursday, Guggenheim analyst Glen Santangelo wrote that the outcomes are in line with the easing of pandemic-era constraints. “The company’s functions seem to be to be benefiting constant with the reopening,” Santangelo wrote. “We believe the final results are robust enough to guidance the shares today, but we take pleasure in investors are even now looking to better fully grasp how the new CEO’s very long-time period approach might vary from earlier management.”

The company’s CEO,
Rosalind Brewer,
succeeded previous CEO
Stefano Pessina
in March.

Walgreens reported that U.S. gross sales have been $28.7 billion for the quarter, up 5.1% from the identical quarter last yr. It said that the company has administered extra than 25 million Covid-19 vaccines so significantly, and that Walgreens had administered 8 million Covid-19 tests, although Boots experienced administered 3 million.

The business attributed its enhanced earnings outlook in portion to the Covid-19 vaccinations it is administering. “The revised advice reflects sturdy benefits in the third quarter and higher clarity on the impression of COVID-19 vaccinations,” the corporation mentioned.

In his notice on the earnings report, Guggenheim’s Santangelo wrote that the company’s balance sheet is much better than it was right before it bought its Alliance Healthcare enterprise to

AmerisourceBergen

(ABC), a $6.5 billion transaction that closed in June.

“Given the longterm structural troubles to the retail pharmacy business, we feel traders could take a hold out and see strategy on the inventory until the tactic turns into much more clear,” Santangelo wrote.

Santangelo fees the inventory a Get. Of the 21 analysts tracked by FactSet who protect Walgreens, only two fee it Acquire or Over weight, when 17 rate it a Keep and two fee it Provide or Underweight.

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com