Why Walgreens Is the Best S&P 500 Stock After Earnings
Walgreens stock is soaring Friday after the embattled pharmacy chain reported strong earnings and gave an upbeat outlook.
Walgreens Boots Alliance (WBA) stock is soaring Friday, up more than 20% to make it the best S&P 500 stock at last check, after the drugstore chain beat top- and bottom-line expectations for its fiscal 2025 first quarter and maintained its full-year profit forecast.
In the three months ended November 30, Walgreens' revenue increased 7.5% year over year to $39.5 billion, driven by growth across all business segments. Its earnings per share (EPS) declined 22.7% from the year-ago period to 51 cents.
"Our first-quarter results reflect our disciplined execution against our 2025 priorities: stabilizing the retail pharmacy by optimizing our footprint, controlling operating costs, improving cash flow and continuing to address reimbursement models," said Walgreens CEO Tim Wentworth in a statement. "While our turnaround will take time, our early progress reinforces our belief in a sustainable, retail pharmacy-led operating model."
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The results handily beat analysts' expectations. Wall Street was anticipating revenue of $37.4 billion and earnings of 37 cents per share, according to CNBC.
Walgreens also maintained its full-year profit forecast, which calls for earnings per share in the range of $1.40 to $1.80.
Is Walgreens stock a buy, sell or hold?
Walgreens' troubles on the price charts have been well-documented. Indeed, heading into Friday's session, sharewere down more than 61% on a year-over-year basis. Unsurprisingly, Wall Street is on the sidelines when it comes to the consumer staples stock.
According to S&P Global Market Intelligence, the average analyst target price for WBA stock is $10.43, representing a discount of nearly 10% to current levels. Meanwhile, the consensus recommendation is Hold.
Financial services firm UBS Global Research is one of those with a Neutral (Hold) rating on the mid-cap stock, along with a $10 price target.
"We believe WBA's fundamentals remain challenged exiting [its] fiscal first quarter," wrote UBS Global Research analyst Kevin Caliendo in a January 5 note. "Pharmacy chain script growth has remained soft, flu season started later than last year, creating a difficult comparison for fiscal Q1, and retailer peers are calling out deal-seeking behavior by consumers and mixed commentary around holiday season sales expectations. However, this reflects more or less a continuation of the status quo over the past nine-plus months."
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