Fundamental analysis
Walgreens Boots Alliance is an international holding company based in Deerfield, Illinois, USA. The company owns the pharmacy chain Walgreens in the US and Boots in the UK. It also owns several companies that manufacture pharmaceuticals.
The company is traded on Nasdaq and is a member of the Nasdaq 100 and S&P 500 indices.
The company has more than 12,500 pharmacies in the US, Europe and Latin America and employs more than 330,000 people.
WBA holds its sales at around $132 billion. In 2022, the profit was USD 4.3 billion, and in 2023, the loss was USD 3 billion.
The company divides its business into 3 main pillars:
– US retail pharmacy (USD 110 billion turnover)
– International (Turnover USD 22 billion)
– US healthcare (USD 6.6 billion turnover)
The company has lost 80% of its share value over the last 5 years. The current price is the lowest since 1997. The highest value was in 2014 when the share price was around USD 90 per share. This was at the time of the acquisition of British pharmacies by Boots.
Results
For Q3 2024, earnings per share were $0.40, up from $0.14 a year ago.
Turnover grew by 2.6% to US$36 billion.
The company is focusing on optimizing its pharmacy network and closing loss-making branches.
It has introduced a new action plan for US retail pharmacy where it plans to invest in new sales channels and improve customer experience with WBA stores.
Operating profit was $111 million compared to a loss of $447 million a year ago.
Net income was $344 million compared to $118 million a year ago.
Technical analysis
The moving averages have been in a downtrend since March 2022 with a brief crossover in early 2023. Currently their spread is widening even more as the price falls.
The RSI is in the neutral zone, however, it reacts to sharp declines in the stock price by getting into the oversold zone.
The last major resistance at the $20 price level was broken a few months ago and the company has continued down since then.
Conclusion
It can be seen that the company is extremely dependent on the performance of the US retail pharmacy division. 80% of the company’s revenue comes from this segment. This segment is extremely competitive. Therefore, it makes sense that the company is now investing massively in developing the US pharmacy network and new sales channels.
However, both economic and technical analysis shows that the company is currently not doing very well. The stock is down, and the technical analysis points to a further decline, not a turnaround. The share price is thus getting very low. However, this may be a good investment if the company can reverse the economic trend and improve the profitability of their US pharmacies. When the stock rises from the current $11 to $22 per share, the price, and therefore the return to the investor, is 100%. However, if the company fails in its plan to revitalize its US pharmacies, then the stock may continue to fall in line with technical analysis.