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Walgreens (WBA) to Report Q3 Earnings: What's in Store?

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Walgreens Boots Alliance, Inc. WBA is slated to release third-quarter fiscal 2021 results on Jul 1, before market open.

In the fiscal second quarter, the company reported an earnings surprise of 27.3%. Over the trailing four quarters, its earnings outperformed the Zacks Consensus Estimate on three occasions and missed in one, the average surprise being 7.15%.

Let’s take a look at how things have shaped up prior to this announcement.

Factors at Play

Walgreens shifted a major part of its business to the digital platform, given the unrelenting continuation of the pandemic. The company’s Find Care platform continues to grow, accelerated by the pandemic and witnessing significant increase in online visits. Notably, the company also introduced COVID vaccination booking on the myWalgreens app. These developments are expected to have accelerated the company’s digital platform growth in the fiscal third quarter, thus adding to the top line.

Retail Pharmacy USA

In the fiscal third quarter, Walgreens is expected to have witnessed a rebound in retail pharmacy business due to improved business environment amid post-pandemic recovery. The company continues to engage customers through the mass personalization strategy, which boosted retail sales during the last-reported quarter. The new loyalty program, myWalgreens, providing all members with new loyalty benefits, personalized products and services, is expected to have once again driven customer adoption rate in the to-be-reported quarter.

In the earlier-reported quarter, the company noted continued strength in health and wellness over the past few months. This favorable trend is likely to have continued through the fiscal third quarter driven by increased health consciousness stemming from the pandemic-led crisis, thus boosting the company’s top line. In April 2021, Walgreens launched No7 Beauty Company, which will be positioned to develop omnichannel offerings. This development is likely to have contributed to Walgreens’ health and beauty businesses in the to-be reported quarter as well.

Walgreens Boots Alliance, Inc. Price and EPS Surprise

Walgreens Boots Alliance, Inc. Price and EPS Surprise
Walgreens Boots Alliance, Inc. Price and EPS Surprise

Walgreens Boots Alliance, Inc. price-eps-surprise | Walgreens Boots Alliance, Inc. Quote

The Zacks Consensus Estimate for Retail Pharmacy USA’s revenues is pegged at $29.47 billion, suggesting a rise of 7.7% from the year-ago quarter’s reported figure.

Retail Pharmacy International

In the earlier-reported quarter, international business outperformed expectations due to focused execution, notably in Boots, U.K., Ireland and Opticians, led by strong growth across all e-commerce businesses. The reopening of economy and faster adoption of digital platform are expected to have accelerated international businesses in the to-be reported quarter.

During the company’s February 2021 update, Walgreens noted that the launch of Boots online Health Hub is conveniently connecting customers to all Boots' existing healthcare services as well as an increasing local doctors, therapists and dermatologists. Boots.com is likely to have continued with its stellar performance on increasing digital transactions and launch of new platform, thus driving revenues in the to-be-reported quarter.

The Zacks Consensus Estimate for Retail Pharmacy International’s revenues is pegged at $2.38 billion, suggesting a surge of 25% from the year-ago quarter’s reported figure.

Pharmaceutical Wholesale

The Pharmaceutical Wholesale division has been performing quite impressively over the past few months. In the last-reported quarter, the segment registered robust growth despite the pandemic-led business challenges, including results of the company's new joint venture in Germany. The company has also been gaining from sales growth in emerging markets over the past few months. These developments are anticipated to have significantly contributed to the company’s fiscal third-quarter performance.

The Zacks Consensus Estimate for Pharmaceutical Wholesale’s revenues is pegged at $6.19 billion, suggesting a rise of 5% from the last-reported quarter’s reported figure.

What Our Model Suggests

Our proven model predicts an earnings beat for Walgreens this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), #2 (Buy) or #3 (Hold) increases the chances of an earnings beat.

Earnings ESP: Walgreens has an Earnings ESP of +8.62%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: The company currently carries a Zacks Rank #3.

Other Stocks Worth a Look

Here are a few medical stocks worth considering as these have the right combination of elements to beat on earnings this reporting cycle.

BioNTech SE Sponsored ADR BNTX has an Earnings ESP of +63.80% and a Zacks Rank of 1, at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

Henry Schein, Inc. HSIC has an Earnings ESP of +6.87% and a Zacks Rank of 1, at present.

Bellerophon Therapeutics, Inc. BLPH has an Earnings ESP of +8.63% and a Zacks Rank of 2, at present.

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