Title: Will WBA's Stock Continue its Uptrend?
Walgreens' shares soared 27% on January 10, following impressive Q1 earnings. The company reported revenue of $39.5 billion and adjusted earnings of $0.51 per share, outperforming consensus estimates. Walgreens kept its full-year earnings forecast between $1.40 and $1.80 per share.
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In Q1, Walgreens' sales grew by 7.5% year-over-year. Key revenue contributors were the U.S. Retail Pharmacy business, which increased 10% to $24.7 billion, and the U.S. Healthcare business, rising 12% to $2.2 billion. International sales also climbed 10% to $6.4 billion. The Pharmacy revenue uptick was primarily driven by drug price inflation and higher prescription volume.
The Germany wholesale business continued to boost Walgreens' international operations, while the Boots business saw escalating sales. Despite a decrease in adjusted operating margin to 1.3% in Q1'25, and declining earnings compared to the prior-year quarter, the company still outperformed expectations.
While Walgreens' stock remains promising following Q1 announcements, its performance over the last four years has been uncertain, marked by volatile annual returns. In contrast, the High Quality Portfolio has exhibited less volatility, consistently outperforming the S&P 500.
In the current unstable macroeconomic landscape with potential rate cuts and geopolitical tensions, could Walgreens face a similar downward spiral, underperforming the S&P 500 in the upcoming year, or can it bounce back? Although its recent developments suggest significant potential for growth, we believe there's more room for advances. Our estimated valuation for Walgreens stands at $14 per share, predicated on a 9x forward expected adjusted earnings of $1.59.
When assessing WBA's potential, it's beneficial to review how Walgreens' Peers perform on key metrics. Explore additional comparisons across various industries through our Peer Comparisons section.
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After outperforming earnings expectations in Q1, Walgreens' revenue increased to $39.5 billion, with WBA valuation estimated at $14 per share based on future earnings. Despite a volatile stock performance over the last four years, Walgreens' Q1 earnings release hints at potential for further growth, surpassing its peers in certain metrics.
