Retail pharmacy chain Walgreens Boots Alliance (WBA) is scheduled to announce its results for the first quarter of Fiscal 2025 on January 10. WBA stock plunged by more than 60% last year, making it one of the worst-performing stocks of 2024 amid declining reimbursement rates for prescription drugs, intense competition, and the impact of macro pressures on the retail business. Given this backdrop, Wall Street expects a steep decline in the company’s Q1 FY25 earnings.
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Analysts expect the company’s adjusted earnings per share (EPS) to plunge by over 42% to $0.38 year-over-year and revenue to increase by a modest 1.9% to $37.4 billion.
Analyst Sentiment Ahead of Walgreen’s Q1 FY25 Earnings
Heading into the Q1 results, TD Cowen analyst Charles Rhyee reiterated a Buy rating on Walgreens stock with a price target of $14. The analyst expects the company to report Q1 FY25 adjusted EPS of $0.36 compared to the consensus estimate of $0.39.
Rhyee thinks that much of the focus will be around the news of a potential takeover of WBA, although he expects management to provide little to no details on this matter. On December 10, the Wall Street Journal reported that Walgreens is in talks with private equity firm Sycamore Partners for its potential sale.
Meanwhile, Ryhee expects WBA to announce the gains from successful negotiations with pharmacy benefit managers (PBMs). He also expects the company to shed more light on the progress made in stabilizing its pharmacy margin and store optimization efforts. In October 2024, Walgreens announced that it plans to close 1,200 stores over the next three years as part of its efforts to streamline its business, reduce costs, and improve profitability.
Meanwhile, JPMorgan analyst Lisa Gill reiterated a Buy rating on WBA stock with a price target of $15. Gill is optimistic about the company’s ability to improve its performance, backed by its strategic initiatives, including the closure of underperforming stores. The analyst views the potential sale of WBA’s Boots business as a strategic move that can bring down its debt and enhance focus on the core U.S. healthcare assets.
Options Traders Expect a Major Move on Earnings
Using TipRanks’ Options tool, we can see what options traders are expecting from the stock immediately after its earnings report. The expected earnings move is determined by calculating the at-the-money straddle of the options closest to expiration after the earnings announcement. If this sounds complicated, don’t worry, the Options tool does this for you.
Indeed, it currently says that options traders are expecting an 9.7% move in either direction.
Is WBA a Good Buy Now?
Other analysts on the Street do not share the optimism of Rhyee and Gill on WBA’s prospects. Overall, Wall Street is currently sidelined on WBA stock, with a Hold consensus rating based on two Buys, seven Holds, and three Sell recommendations. The average WBA stock price target of $13.67 implies 41.4% upside potential.
