Walgreens Stock Hits 27-Year Low After Massive Earnings Miss

Walgreens Boots Alliance stock is tanking Thursday the pharmacy retailer came up short of earnings expectations and slashed its full-year outlook.

Walgreens stock
(Image credit: Getty Images)

Walgreens Boots Alliance (WBA) stock is down nearly 25% Thursday to trade at a 27-year low after the pharmacy retail chain missed earnings expectations for its fiscal third quarter and cut its outlook for the full year.

In the three months ended May 31, Walgreens' revenue increased 2.6% year-over-year to $36.4 billion, which included a 2.3% year-over-year rise in its domestic retail pharmacy segment to $28.5 billion. The company said earnings per share (EPS) slumped 36.6% to 63 cents from the year-ago period.

"We continue to face a difficult operating environment, including persistent pressures on the U.S. consumer and the impact of recent marketplace dynamics which have eroded pharmacy margins," Walgreens CEO Tim Wentworth said in a statement. "Our results and outlook reflect these headwinds, despite solid performance in both our International and U.S. Healthcare segments."

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The results were mixed compared with analysts' expectations. According to Yahoo Finance, Wall Street was anticipating revenue of $35.9 billion and earnings of 68 cents per share.

As a result of "challenging pharmacy industry trends and a worse-than-expected U.S. consumer environment," Walgreens cut its full-year earnings guidance. The company now anticipates EPS in the range of $2.80 to $2.95, down from its previous guidance of a range of $3.20 to $3.35.

Is Walgreens stock a buy, sell or hold?

It's been a rough stretch for the former Dow Jones stock, which was replaced in the 30-stock index by Amazon (AMZN) earlier this year. Indeed, shares were down nearly 40% heading into today's session, so it's unsurprising that Wall Street is on the sidelines when it comes to WBA. 

According to S&P Global Market Intelligence, the average analyst target price for WBA stock is $21.52, representing implied upside of more than 82% to current levels. Despite the significant implied upside, the consensus recommendation is a Hold. 

Given the weak quarter and reduced full-year outlook, it would not be a surprise to see analysts downwardly revise their price targets on WBA stock in the days and weeks ahead.

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Joey Solitro

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.