Walgreens Boots Alliance (WBA) AI Stock Analysis

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Walgreens Boots Alliance

(NASDAQ:WBA)

Rating:57Neutral

Price Target:

$11.50

▲(1.41%Upside)

Walgreens Boots Alliance's financial performance is the primary concern, with negative profit margins and high leverage posing significant risks. While there are some recovery signs in cash flow, the technical analysis is cautiously optimistic, indicating potential for slight upward movement. The valuation presents a mixed picture with a negative P/E ratio but a high dividend yield. These factors collectively result in a moderate overall score.

Positive Factors

Acquisition Premium

The cash consideration represents an +8% premium to its closing price and +29% from when the transaction was first reported in the media.

Market Activity

WBA shares increased by 17% following reports of talks with private equity firm Sycamore Partners to go private.

Profitability

US Healthcare's profitability improved significantly, driven by contributions from VillageMD and Shields.

Negative Factors

Market Competition

CVS has been gaining share vs. the market, including WBA, for a few years.

Operational Challenges

Concerns about WBA's lack of cash flow and upcoming debt challenges could complicate a potential deal.

Retail Sales Decline

Macro remains a challenge with comp retail sales impacted by a 1.5% decrease in discretionary categories.

Walgreens Boots Alliance (WBA) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$9.81B

Dividend Yield8.81%

Average Volume (3M)9.83M

Price to Earnings (P/E)―

Beta (1Y)0.33

Revenue Growth5.08%

EPS Growth4.43%

CountryUS

Employees193,000

SectorHealthcare

Sector Strength44

IndustryMedical - Pharmaceuticals

Share Statistics

EPS (TTM)0.63

Shares Outstanding865,560,670

10 Day Avg. Volume13,351,799

30 Day Avg. Volume9,834,507

Financial Highlights & Ratios

PEG Ratio-0.05

Price to Book (P/B)1.36

Price to Sales (P/S)0.00

P/FCF Ratio16.99

Enterprise Value/Market Cap3.99

Enterprise Value/Revenue0.07

Enterprise Value/Gross Profit1.48

Enterprise Value/Ebitda-1.10

Forecast

1Y Price Target

$11.50

Price Target Upside1.41% Upside

Rating ConsensusHold

Number of Analyst Covering2

Walgreens Boots Alliance Business Overview & Revenue Model

Company DescriptionWalgreens Boots Alliance, Inc. (WBA) is a global leader in retail pharmacy, health, and wellness. It operates through two primary divisions: Retail Pharmacy USA and Retail Pharmacy International. The company offers a wide range of pharmaceutical, health, and wellness products and services through its extensive network of retail drugstores, including Walgreens in the United States and Boots in the United Kingdom and other countries. WBA is committed to improving health outcomes through innovative pharmacy services and personalized care.

How the Company Makes MoneyWalgreens Boots Alliance generates revenue primarily through the sale of prescription medications, over-the-counter health products, and general merchandise. In the Retail Pharmacy USA segment, WBA makes money from dispensing prescription drugs, front-end sales of consumer goods, and health services, including vaccinations and health consultations. The Retail Pharmacy International segment contributes earnings through similar sales channels in international markets, particularly in Europe. Additionally, WBA benefits from strategic partnerships with healthcare providers and pharmacy benefit managers, which enhance its service offerings and expand its customer base. The company also explores opportunities in digital health and e-commerce to further drive revenue growth.

Walgreens Boots Alliance Key Performance Indicators (KPIs)

Any

Gross Margin by Segment

Gross Margin by Segment
Shows the percentage of revenue remaining after cost of goods sold for each segment, indicating pricing power and cost efficiency across the company’s diverse operations.

Chart InsightsWalgreens Boots Alliance is experiencing divergent trends across its segments. The US Retail Pharmacy segment is facing a persistent decline in gross margins, highlighting ongoing challenges in this area. Conversely, the US Healthcare segment is showing a positive turnaround, with margins improving significantly since 2022, suggesting successful strategic adjustments. The International segment remains relatively stable, but with slight fluctuations. Investors should watch for further developments in the US Healthcare segment, as its continued improvement could offset weaknesses in retail pharmacy operations.

Data provided by:

Main Street Data

Walgreens Boots Alliance Earnings Call Summary

Earnings Call Date:Apr 08, 2025

(Q1-2025)

% Change Since: 5.88%|

Next Earnings Date:Jun 26, 2025

Earnings Call Sentiment Neutral

The earnings call highlighted strong sales growth across all segments, improved free cash flow, and positive performance in the pharmacy and healthcare segments. However, it also noted challenges with declining retail sales in the U.S. and a significant decline in adjusted EPS. Despite these challenges, the company remains focused on executing its turnaround strategy.

Q1-2025 Updates

Positive Updates

Sales Growth Across All Segments

Sales increased 6.9% on a constant currency basis with growth across all segments.

Improved Free Cash Flow

Free cash flow improved due to decreased capital expenditures and higher adjusted operating income.

U.S. Pharmacy Services Performance

U.S. Pharmacy Services performed better than expectations with higher margin for COVID-19 vaccines.

International Business Growth

Total sales in the International segment grew 6.5% with Germany wholesale increasing 11.3% and Boots UK up 4.5%.

Healthcare Segment Growth

U.S. Healthcare sales of $2.2 billion increased 12%, with strong performance from VillageMD and Shields.

Negative Updates

Decline in U.S. Retail Sales

Comparable retail sales in the U.S. declined 4.6% in the quarter due to a softer cough, cold, and flu season and challenging consumer discretionary spending.

Adjusted EPS Decline

Adjusted EPS declined 23% year-over-year on a constant currency basis due to prior year sale-leaseback gains and lower Cencora equity income.

Ongoing Retail Challenges

Persistent deterioration in consumer discretionary spending and promotional environment continue to impact the retail business.

Company Guidance

During the Walgreens Boots Alliance earnings call for Q1 2025, the management provided detailed guidance on several key metrics. Sales increased by 6.9% on a constant currency basis, with growth across all segments. The adjusted earnings per share (EPS) was reported at $0.51, reflecting a 23% decline year-over-year, primarily due to prior year sale-leaseback gains and lower Cencora equity income. Despite these challenges, the U.S. Retail Pharmacy segment saw a notable comparable sales growth of 8.5%, driven by pharmacy performance, although retail sales declined. In the U.S. Healthcare segment, sales rose by 12%, with VillageMD and Shields showing strong performance. The company achieved significant progress in its Footprint Optimization Program, closing about 70 stores in the quarter and planning for nearly 450 more by the end of 2025. For the fiscal year, Walgreens Boots Alliance reaffirmed its adjusted EPS guidance of $1.40 to $1.80, while also expecting retail comp sales to decline approximately 4% to 5%. The company emphasized its focus on stabilizing and turning around its business by improving drug procurement, optimizing store operations, and advancing its pharmacy services, with a strong emphasis on cost management and cash flow improvement.

Walgreens Boots Alliance Financial Statement Overview

Summary

Walgreens Boots Alliance faces significant challenges with profitability and leverage. While revenue has grown, profit margins are negative, and the balance sheet shows high debt levels. Cash flow metrics provide some positive signs of recovery, particularly in free cash flow, but overall financial stability remains a concern.

Income Statement

Neutral

Walgreens Boots Alliance has faced recent financial challenges as reflected in its TTM (Trailing-Twelve-Months) results. The gross profit margin stands at 17.4%, but negative EBIT and net profit margins indicate profitability issues, with a net profit margin of -3.8%. Revenue growth over the last few years is present but fluctuating, indicating instability.

Balance Sheet

Neutral

The company's balance sheet shows significant leverage with a debt-to-equity ratio of over 4.2, indicating high financial risk. The equity ratio is low at 10.1%, reflecting limited equity compared to assets. Negative return on equity further highlights profitability challenges.

Cash Flow

Neutral

There is a moderate operating cash flow to net income ratio of -0.28, indicating cash flow constraints despite improving free cash flow. The free cash flow growth rate is positive, signaling some recovery in cash generation, though still not robust.

TTM	Sep 2024	Sep 2023	Sep 2022	Sep 2021	Sep 2020
Breakdown
Income Statement		Total Revenue
151.94B	147.66B	139.08B	132.70B	132.51B	121.98B
	Gross Profit
26.43B	26.52B	27.07B	28.27B	28.07B	26.08B
	EBIT
-3.06B	-14.08B	-6.88B	1.39B	2.34B	982.00M
	EBITDA
-3.02B	-11.28B	3.48B	4.96B	5.96B	2.84B
	Net Income Common Stockholders
-5.78B	-8.64B	-3.08B	4.34B	2.54B	456.00M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.13B	3.11B	739.00M	2.47B	1.19B	516.00M
	Total Assets
70.22B	81.04B	96.63B	90.12B	81.28B	87.17B
	Total Debt
30.13B	32.85B	33.53B	35.48B	33.39B	40.14B
	Net Debt
29.43B	31.53B	32.81B	34.12B	32.20B	39.62B
	Total Liabilities
62.96B	68.86B	68.14B	59.72B	57.46B	66.04B
	Stockholders Equity
7.11B	10.45B	20.02B	29.37B	23.82B	21.14B
Cash Flow		Free Cash Flow
571.00M	-363.00M	141.00M	2.17B	4.18B	4.11B
	Operating Cash Flow
1.60B	1.02B	2.26B	3.90B	5.55B	5.48B
	Investing Cash Flow
1.32B	1.88B	-3.09B	-1.06B	4.07B	-1.30B
	Financing Cash Flow
-2.38B	-538.00M	-887.00M	-1.50B	-9.04B	-4.65B

Walgreens Boots Alliance Technical Analysis

Technical Analysis Sentiment

Positive

Last Price11.34

Price Trends

50DMA

11.07

Positive

100DMA

10.97

Positive

200DMA

10.09

Positive

Market Momentum

MACD

0.06

Negative

RSI

61.08

Neutral

STOCH

85.67

Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WBA, the sentiment is Positive. The current price of 11.34 is above the 20-day moving average (MA) of 11.24, above the 50-day MA of 11.07, and above the 200-day MA of 10.09, indicating a bullish trend. The MACD of 0.06 indicates Negative momentum. The RSI at 61.08 is Neutral, neither overbought nor oversold. The STOCH value of 85.67 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for WBA.

Walgreens Boots Alliance Risk Analysis

Walgreens Boots Alliance disclosed 46 risk factors in its most recent earnings report. Walgreens Boots Alliance reported the most risks in the "Finance & Corporate" category.

Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Latest Risks Added 0 New Risks

Walgreens Boots Alliance Peers Comparison

Overall Rating

UnderperformOutperform

Sector (54)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
QGEN	70 Outperform	$10.01B	111.93	2.67%	2.85%	3.31%	―
COO	69 Neutral	$14.50B	34.64	5.15%	―	6.88%	21.11%
UHS	64 Neutral	$11.12B	9.70	18.35%	0.46%	9.73%	51.87%
WBA	57 Neutral	$9.81B	―	-56.13%	8.81%	5.08%	4.43%
Sector *	54 Neutral	$5.38B	3.40	-45.06%	3.28%	16.75%	-0.02%
VTRS	53 Neutral	$10.61B	―	-21.25%	5.31%	-6.88%	-6809.78%
ROIV	51 Neutral	$7.73B	1.93	-8.56%	―	-20.84%	-102.48%

* Healthcare Sector Average

Performance Comparison

WBA

Walgreens Boots Alliance

11.34

-3.30

-22.54%

COO

Cooper Co

71.42

-22.78

-24.18%

VTRS

Viatris

8.98

-0.94

-9.48%

QGEN

Qiagen

46.72

3.38

7.80%

UHS

Universal Health

172.29

-15.13

-8.07%

ROIV

Roivant Sciences

11.28

0.47

4.35%

Walgreens Boots Alliance Corporate Events

Private Placements and Financing

Walgreens Boots Alliance Initiates Securitization Facility

Neutral

Apr 25, 2025

On April 24, 2025, Walgreens Boots Alliance‘s subsidiary, Wilmot Retail, LLC, initiated an accounts receivable securitization facility with a borrowing capacity of up to $2.5 billion. This move was aimed at repaying outstanding amounts under two senior unsecured delayed draw term loan credit agreements, thereby terminating all commitments under these facilities.

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.