Can Walgreens’ earnings shock be sufficient as inventory faces strain amid litigation? woes

Walgreens Boots Alliance (NASDAQ:WBA) is scheduled to announce This fall earnings outcomes on Thursday, October thirteenth, earlier than market open.

The consensus EPS Estimate is $0.77 (-34.2% Y/Y) and the consensus Income Estimate is $32.17B (-6.1% Y/Y).

Over the final 2 years, WBA has overwhelmed EPS estimates 100% of the time and has overwhelmed income estimates 88% of the time.

During the last 3 months, EPS estimates have seen 1 upward revision and seven downward. Income estimates have seen 2 upward revisions and 4 downward.

The drug retailer’s inventory fell -7.27% on June 30 regardless of Q3 outcomes beating analysts estimates. Income declined -4.2% Y/Y to $32.6B, whereas non-GAAP EPS fell ~30% YoY to $0.96.

Walgreens appears to be centered on acquisitions prior to now few months. A day in the past (Oct. 11), WBA mentioned it’ll purchase the remaining 45% stake in dwelling care companies supplier CareCentrix for ~$392M. The corporate had accomplished the acquisition of the 55% curiosity in CareCentrix on Aug. 31.

Walgreens introduced in September that it was buying the remaining ~30% stake in Shields Well being Options for ~$1.37B. WBA had taken its stake in Shields to ~71% final 12 months.

There have been experiences in July that Teladoc might doubtlessly be a goal for a CVS Well being or Walgreens, across the time Amazon agreed to purchase One Medical for $3.9B.

Nevertheless, the pharmacy retail chain has been embroiled in a number of lawsuits. Earlier in October, a panel of federal judges ordered to consolidate greater than 80 instances accusing Walgreens, CVS Well being and Walmart of promoting generic Tylenol (acetaminophen) with out warning of a possible hyperlink to autism if taken throughout being pregnant.

Opioid-related lawsuits additionally take into account to linger. In August, a federal choose in Ohio ordered these three corporations to pay a mixed $650.6M to 2 counties for the harm carried out by the opioid disaster.

In the meantime, a courtroom ruling in San Francisco holding Walgreens chargeable for the opioid disaster within the metropolis, created one other overhang for the corporate shares, in response to Financial institution of America.

YTD, WBA has shed ~38%, much more than the broad market indicator SP500, which has misplaced ~25% on this interval. See chart right here.

The SA Quant Ranking on the shares is Maintain, which takes into consideration elements comparable to Momentum, Profitability, and Valuation amongst others. WBA has an A- issue grade for Profitability and an F rating for Development. The common Wall Avenue Analysts’ Ranking agrees with a Maintain score of its personal, whereby 16 out of 19 analysts see the inventory as such.

On the operations entrance, Walgreens rolled out up to date COVID-19 booster pictures, principally from Pfizer and BioNTech, in September, as authorities deliveries of Moderna’s vaccine have been restricted.

Current earnings Evaluation from our contributors:Walgreens: Choices Merchants Anticipate A Massive Inventory Value Transfer Put up EarningsWalgreens Earnings Preview: Headed In direction of ‘Worth Entice’ Neighborhood, However A 12% Free-Money-Circulation Yield Is Noteworthy