Walgreens Boots Alliance (NASDAQ:WBA) shares crumbled in the premarket session today after the retail pharmacy giant reported a mixed set of third-quarter numbers and lowered its financial outlook.
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Walgreens’ Disappointing Performance
During the quarter, WBA’s revenue increased by 2.6% year-over-year to $36.35 billion. The figure fared better than estimates by $410 million. Its EPS of $0.63, on the other hand, missed the cut by a margin of $0.05. This was a nearly 37% drop in the company’s bottom line.
Walgreens is facing a difficult operating environment and pressure on its margins. Year-to-date, the company has managed to improve its sales by about 6.2% to $110.1 billion. However, its operating loss has widened to $13.1 billion from $6.7 billion in the comparable year-ago period.
Lowered Outlook
Owing to these challenges, WBA plans to shut some of its underperforming stores in the U.S. Additionally, the company is undertaking an “action plan” in its U.S. Retail Pharmacy operations to improve performance. Moreover, Walgreens lowered its EPS outlook for the full year to a range of $2.80 to $2.95. Previously, Walgreens expected EPS for the year to hover in the range of $3.20 to $3.35.
The double whammy of store closures and lowered outlook is weighing heavily on investor sentiment in WBA today. Consequently, shares of the company are down by over 14%. That’s on top of a nearly 41% slide in WBA’s share price over the past year.
Is WBA a Buy, Sell, or Hold?
Overall, the Street has a Hold consensus rating on Walgreens, alongside an average WBA price target of $21.08. However, analysts’ views on WBA stock could see a revision following today’s earnings report.
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