On Monday, Truist Securities maintained its Hold rating on Walgreens Boots Alliance (NASDAQ:WBA) stock, with a steady price target of $10.00. The stock, currently trading at $11.33, has shown strong momentum with a 24% gain in the past week, though it remains significantly below its 52-week high of $24.20.
According to InvestingPro data, analyst targets for the stock range from $7 to $20, reflecting mixed market sentiment. The company's financial performance for the first quarter of fiscal year 2025 was stronger than anticipated, surpassing both top and bottom-line expectations. Despite challenges in the retail sector due to a tough consumer environment and a weaker cough, cold, and flu season, Walgreens reported a promising start to the fiscal year.
Walgreens posted first-quarter revenue of $39.5 billion, which was above the $36.9 billion estimate from Truist and the consensus of $37.4 billion. This performance contributes to the company's trailing twelve-month revenue of $150.4 billion, representing a 5.6% year-over-year growth. InvestingPro analysis shows the company maintains a substantial market presence with a market capitalization of $9.8 billion. The adjusted earnings per share (EPS) came in at $0.51, also exceeding Truist's estimate of $0.39 and the consensus of $0.38.
The company has reaffirmed its full-year adjusted EPS guidance, albeit with reduced expectations for U.S. Retail comparable sales. The reaffirmation of the guidance reflects the company's positive developments in cost savings, footprint rationalization, and year-over-year cash flow and working capital improvements.
The firm's analysts noted the progress in international segments and U.S. Healthcare, as well as the ongoing sale process for Walgreens' VillageMD business, with Summit/CityMD currently under evaluation. InvestingPro's Financial Health Score indicates a WEAK overall rating, suggesting the importance of these strategic initiatives for the company's future performance.
The company currently offers an 8.5% dividend yield, though dividend growth has declined by 47.9% over the past year. Additionally, Walgreens is making strides in its strategic initiatives, including store optimization. The company closed 67 stores during the quarter and has put in place a dedicated team to manage the next approximately 450 closures, keeping in line with the fiscal year 2025 target of closing 500 stores.
Importantly, management has indicated that prescription retention rates are better than historical trends, and the majority of staff from the closing stores have been retained. Stores in the retained footprint are outperforming those set to close, with approximately 250 basis points of outperformance in comparable front-end sales and around 390 basis points in comparable prescription sales.
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