Mizuho maintained its Neutral stance on Walgreens Boots Alliance (NASDAQ:WBA), keeping the price target fixed at $10.00. The company reported its fourth quarter fiscal year 2024 adjusted earnings per share (EPS) at $0.39, surpassing the consensus estimates by 8.3%. Walgreens also provided its initial fiscal year 2025 adjusted EPS guidance in the range of $1.40 to $1.80, compared to Mizuho's estimate of $1.75 and the consensus of $1.73. The anticipated financial performance for FY25 is expected to be influenced by various factors.
The growth in the U.S. healthcare and international segments is projected to be a key driver for Walgreens in FY25. However, this is likely to be balanced by a forecasted decline in the U.S. retail pharmacy sector. Additionally, a higher adjusted tax rate along with diminished returns from sale-leaseback transactions and earnings from Cencora are also expected to impact the financial outlook for the company.
The commentary from Mizuho suggests that the fourth quarter results and the guidance for the upcoming fiscal year align with the current expectations of investors, which have been adjusted downwards. This reflects a market sentiment that had anticipated the various challenges and growth opportunities outlined by Walgreens.
Walgreens' performance and projections denote a complex financial landscape where growth in certain areas is offset by declines in others. The company's ability to navigate this environment will be critical as it moves into the 2025 fiscal year.
Walgreens Boots Alliance announced a decrease in adjusted earnings per share (EPS) for the fourth quarter of 2024, down 41% year-over-year to $0.39, and a 28% decline in full-year adjusted EPS to $2.88. The company also revealed plans to close approximately 1,200 underperforming stores over the next three years.
Analyst firms Leerink and Deutsche Bank adjusted their price targets for Walgreens to $10, while maintaining their respective Market Perform and Hold ratings. TD Cowen maintained its Buy rating and $16 price target, emphasizing the company's proactive measures and the anticipated $100 million benefit to adjusted operating income by fiscal year 2025.
InvestingPro Insights
Walgreens Boots Alliance's financial landscape, as reflected in the recent Mizuho analysis, is further illuminated by real-time data from InvestingPro. The company's market capitalization stands at $9 billion, with a price-to-book ratio of 0.75, suggesting the stock may be undervalued relative to its book value. This could be particularly relevant given Mizuho's maintained Neutral stance and $10 price target.
An InvestingPro Tip highlights that Walgreens' dividend yield is very high at 9.6%, which may be attractive to income-focused investors. However, it's worth noting that the dividend growth rate has declined by 47.92% over the last twelve months, potentially signaling challenges in sustaining such high payouts.
Another crucial InvestingPro Tip points out that Walgreens is trading at a low Price/Book ratio compared to its peers. This aligns with the company's current P/B of 0.75 and could indicate a potential value opportunity, though it's essential to consider this in the context of the company's overall financial health and market position.
For investors seeking a more comprehensive analysis, InvestingPro offers additional tips and metrics that could provide deeper insights into Walgreens' financial situation and future prospects. Currently, there are 11 additional tips available on InvestingPro for Walgreens Boots Alliance, offering a broader perspective on the company's valuation, growth potential, and financial stability.
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