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Walgreens Boots Alliance (WBA)
NASDAQ:WBA

Walgreens Boots Alliance (WBA) AI Stock Analysis

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Walgreens Boots Alliance

(NASDAQ:WBA)

Rating:57Neutral
Price Target:
$11.50
▲(1.50%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
Investment and Ownership
WBA's chairman, Stefano Pessina (17% ownership of WBA shares) is voting in favor of the deal and will reinvest the cash consideration (plus an additional cash investment) into the acquiring company.
Private Acquisition
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
Cash Flow Challenges
There are concerns about WBA's lack of cash flow and upcoming debt challenges, which could complicate a potential deal.
Market Competition
CVS has been gaining share vs. the market, including WBA, for a few years.
Operational Uncertainty
Sycamore is expected to hold onto the US pharmacy business and sell or take public the other parts of the business, suggesting restructuring and potential instability.

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

Walgreens Boots Alliance Business Overview & Revenue Model

Company DescriptionWalgreens Boots Alliance, Inc. operates as a pharmacy-led health and beauty retail company. It operates through two segments, the United States and International. The United States segment sells prescription drugs and an assortment of retail products, including health, wellness, beauty, personal care, consumable, and general merchandise products through its retail drugstores. It also provides central specialty pharmacy services and mail services. As of August 31, 2021, this segment operated 8,965 retail stores under the Walgreens and Duane Reade brands in the United States; and five specialty pharmacies. The International segment sells prescription drugs; and health and wellness, beauty, personal care, and other consumer products through its pharmacy-led health and beauty retail stores and optical practices, as well as through boots.com and an integrated mobile application. It also engages in pharmaceutical wholesaling and distribution business in Germany. As of August 31, 2021, this segment operated 4,031 retail stores under the Boots, Benavides, and Ahumada in the United Kingdom, Thailand, Norway, the Republic of Ireland, the Netherlands, Mexico, and Chile; and 548 optical practices, including 160 on a franchise basis. Walgreens Boots Alliance, Inc. was founded in 1901 and is based in Deerfield, Illinois.
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
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: 5.79%|
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
55
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
45
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
60
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.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
151.94B147.66B139.08B132.70B132.51B121.98B
Gross Profit
26.43B26.52B27.07B28.27B28.07B26.08B
EBIT
-3.06B-14.08B-6.88B1.39B2.34B982.00M
EBITDA
-3.02B-11.28B3.48B4.96B5.96B2.84B
Net Income Common Stockholders
-5.78B-8.64B-3.08B4.34B2.54B456.00M
Balance SheetCash, Cash Equivalents and Short-Term Investments
1.13B3.11B739.00M2.47B1.19B516.00M
Total Assets
70.22B81.04B96.63B90.12B81.28B87.17B
Total Debt
30.13B32.85B33.53B35.48B33.39B40.14B
Net Debt
29.43B31.53B32.81B34.12B32.20B39.62B
Total Liabilities
62.96B68.86B68.14B59.72B57.46B66.04B
Stockholders Equity
7.11B10.45B20.02B29.37B23.82B21.14B
Cash FlowFree Cash Flow
571.00M-363.00M141.00M2.17B4.18B4.11B
Operating Cash Flow
1.60B1.02B2.26B3.90B5.55B5.48B
Investing Cash Flow
1.32B1.88B-3.09B-1.06B4.07B-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 Price11.33
Price Trends
50DMA
11.07
Positive
100DMA
10.99
Positive
200DMA
10.07
Positive
Market Momentum
MACD
0.05
Positive
RSI
60.90
Neutral
STOCH
74.10
Neutral
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 11.33 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 10.07, indicating a bullish trend. The MACD of 0.05 indicates Positive momentum. The RSI at 60.90 is Neutral, neither overbought nor oversold. The STOCH value of 74.10 is Neutral, 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
70
Outperform
$9.85B108.962.67%3.31%
UHUHS
70
Outperform
$12.20B10.6418.35%0.42%9.73%51.87%
COCOO
69
Neutral
$14.43B34.915.15%6.88%21.11%
WBWBA
57
Neutral
$9.73B-56.13%8.89%5.08%4.43%
54
Neutral
$5.31B3.28-45.10%2.80%16.76%0.02%
53
Neutral
$10.22B-21.25%5.51%-6.88%-6809.78%
51
Neutral
$7.63B1.93-8.56%-20.84%-102.48%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WBA
Walgreens Boots Alliance
11.33
-3.78
-25.02%
COO
Cooper Co
71.97
-23.11
-24.31%
VTRS
Viatris
8.81
-1.23
-12.25%
QGEN
Qiagen
45.48
0.61
1.36%
UHS
Universal Health
189.39
1.22
0.65%
ROIV
Roivant Sciences
11.08
0.50
4.73%

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
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

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.