Last week, you might have seen that Walgreens Boots Alliance, Inc. (NASDAQ:WBA) released its quarterly result to the market. The early response was not positive, with shares down 8.2% to US$54.22 in the past week. Revenues were in line with forecasts, at US$34b, although statutory earnings per share came in 17% below what analysts expected, at US$0.95 per share. Analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Following last week's earnings report, Walgreens Boots Alliance's 20 analysts are forecasting 2020 revenues to be US$139.9b, approximately in line with the last 12 months. Statutory earnings per share are expected to step up 13% to US$4.61. Yet prior to the latest earnings, analysts had been forecasting revenues of US$139.6b and earnings per share (EPS) of US$4.97 in 2020. Analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share forecasts for next year.
The consensus price target held steady at US$57.00, with analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. The most optimistic Walgreens Boots Alliance analyst has a price target of US$65.00 per share, while the most pessimistic values it at US$45.00. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.
It can be useful to take a broader overview by seeing how analyst forecasts compare, both to the Walgreens Boots Alliance's past performance and to peers in the same market. It's pretty clear that analysts expect Walgreens Boots Alliance's revenue growth will slow down substantially, with revenues next year expected to grow 1.8%, compared to a historical growth rate of 8.4% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 4.1% per year. So it's pretty clear that, while revenue growth is expected to slow down, analysts still expect the wider market to grow faster than Walgreens Boots Alliance.
The Bottom Line
The most important thing to take away is that analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Walgreens Boots Alliance going out to 2024, and you can see them free on our platform here..
It might also be worth considering whether Walgreens Boots Alliance's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.
If you spot an error that warrants correction, please contact the editor at firstname.lastname@example.org. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Thank you for reading.