RBC Says This Pharmacy Chain Has Health Investments On Track Despite Abandoning Divestiture

  • RBC Capital Markets lowered the price target on Walgreens Boots Alliance Inc WBA to $42 (10% upside) from $46 and maintained the Sector Perform rating.
  • The analysts say that WBA posted solid fiscal 3Q22 results slightly ahead of their estimates and consensus on steady execution in the U.S. against a difficult comp and continued recovery in the international business.
  • Related: Walgreens Posts Fall In Q3 Profit On Opioid Settlement, Lower Pharmacy Sales.
  • "While we are somewhat disappointed by the abandonment of the Boots divestiture as a catalyst for incremental healthcare investments, we are encouraged by management's commitment to prioritizing Walgreens Health as a core long-term growth avenue," RBC wrote.
  • Also ReadWalgreens Retains Boots Business Ownership Amid Market Instability
  • Despite abandoning the Boots sale, the analysts write that the company remains on track with Walgreens Health investments, with solid pro forma growth momentum.
  • Pro forma sales among VillageMD and Shields grew 65% in the quarter. 
  • RBC says that with a $31 million investment in organic growth during the quarter, the business can potentially generate sales of $2 billion in 2022, partially hampered by the delayed closing of the CareCentrix investment, expected by year-end.
  • RBC lowered 2023 estimated earnings in anticipation of economic headwinds impacting the retail sector. 
  • Price Action: WBA shares are down 0.88% at $38.22 during the market session on the last check Tuesday.
  • Photo Via Company

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