On Feb 12, we issued an updated research report on Walgreens Boots Alliance, Inc. WBA. The company reaps benefits from its growth initiatives and major business tie-ups. However, it suffers headwinds in the form of fierce competition and tough industry conditions. The stock carries a Zacks Rank #4 (Sell).
Over the past three months, shares of the company have underperformed its industry. The stock has gained 1.3% compared with the industry’s 11.4% rally.
Walgreens Boots suffered a disappointing first-quarter fiscal 2020 bottom-line performance, largely due to persistent reimbursement pressure and adverse mix associated with brand inflation. The ongoing pharmacy trends, currently affecting the overall market, may continue to be an overhang for the coming months.
Meanwhile, tough market conditions, particularly in retail, have been inducing sluggishness in the Retail Pharmacy International division. According to Walgreens Boots, reimbursement pressure continues as opportunities for mitigation are lower than expected.
On a positive note, intensifying competition in the U.S. retail drugstore market compelled Walgreens Boots to diversify its product offerings. In this line, we are currently looking forward to Walgreens’ tie up with Alphabet’s life sciences and healthcare segment Verily on multiple projects related to chronic ailment. This partnership aims at providing advanced healthcare outcomes to chronic conditions like diabetes at low cost of care.
Under the company’s recent partnership with Kroger, the company is working on a pilot program at selected Walgreens outlets in Northern Kentucky and Tennessee. The Kroger Express concept will be applied to 50 Walgreens stores while Walgreen’s own health and beauty brands will be available across 17 Kroger stores. The partnership has been progressing well through the reported quarter. The initial Kroger Express pilots in Northern Kentucky have been functional for just over a year while the pilot in Knoxville, TN was active for five months.
A few better-ranked stocks from the broader medical space are LeMaitre Vascular, Inc. LMAT, Hill-Rom Holdings, Inc. HRC and ResMed Inc. RMD.
LeMaitre currently sports a Zacks Rank #2 and has a projected long-term earnings growth rate of 10%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Hill-Rom’s long-term earnings growth rate is estimated at 11.1%. The company presently carries a Zacks Rank of 2.
ResMed’s long-term earnings growth rate is expected at 12%. It currently has a Zacks Rank #1.
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ResMed Inc. (RMD) : Free Stock Analysis Report
Hill-Rom Holdings, Inc. (HRC) : Free Stock Analysis Report
Walgreens Boots Alliance, Inc. (WBA) : Free Stock Analysis Report
LeMaitre Vascular, Inc. (LMAT) : Free Stock Analysis Report
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