Market Overview

Investor Sentiment For Walgreens Hitting New Lows

Investor Sentiment For Walgreens Hitting New Lows
Related ABC
AmerisourceBergen (ABC) Up 7.6% Since Earnings Report: Can It Continue?
Barron's Picks And Pans: Retail Stocks, Berkshire Hathaway And More
Related RAD
Rite Aid & Fred's Surge on Rumors of Possible Nod for Merger
Walmart To Partner With Quest Diagnostics To Offer In-Store Lab Work
Nasdaq Fights For Gain As Volume Runs Higher (Investor's Business Daily)

Deutsche Bank said in a research note on Tuesday that investor sentiment in the drug supply chain is as bad as it can ever be. However, the firm maintains its Buy rating on Walgreens Boots Alliance Inc (NASDAQ: WBA), as it views it as one company in the drug supply chain where it expects strategy and execution to drive improvement in earnings per share.

The company is due to release its fiscal year fourth-quarter results before the markets open on Thursday.

F4Q Expectations

Analyst George Hill estimates earnings of $0.98 per share, in the middle of the implied guidance of $0.93–$1.03. Hill said he expects the results to reflect slow seasonality, exit of the Russian drug distribution business, a negative pound exchange rate and a full quarter of 15 percent ownership in AmerisourceBergen Corp. (NYSE: ABC) shares.

FY17 Guidance

While noting that investors are below-consensus on their fiscal year 2017 earnings per share estimate, Deutsche Bank is of the view that $4.85–$4.90 could be viewed with relief. Despite being positive on Walgreen's recent PBM partnerships, the firm said pricing concessions could offset volume gains in the first year. Estimating 10–15 cents contribution from Tricare pharmacy relationship in 2017 and 18 cents from a full year ownership of 24 percent of Amerisource, the firm expects 2017 earnings per share of $5.03, in line with the consensus estimate.

Focus During Conference Call

The firm believes answers will sought for questions on Rite Aid Corporation (NYSE: RAD) transaction process, drug and pharmacy pricing and the recent PBM partnerships announced by Walgreens.

As such, the firm maintains its Buy rating on the shares of the company with its price target at $94.

At last check, shares of Walgreens Boots Alliance were up 0.06 percent at $78.06.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for ABC

May 2017JefferiesInitiates Coverage OnHold
Apr 2017NeedhamInitiates Coverage OnBuy
Jan 2017Leerink SwannUpgradesMarket PerformOutperform

View More Analyst Ratings for ABC
View the Latest Analyst Ratings

Posted-In: Deutsche BankEarnings Long Ideas Guidance Previews Analyst Ratings Trading Ideas Best of Benzinga


Related Articles (ABC + RAD)

View Comments and Join the Discussion!