Earnings expected to decline
Wall Street expects Walgreens Boots Alliance’s (WBA) earnings to continue to decline in coming quarters, reflecting higher reimbursement pressure. Analysts expect Walgreens’ EPS to mark a high-single-digit decline in the second half of fiscal 2019. Meanwhile, EPS are likely to stay low in the first of fiscal 2020.
Weak earnings and challenges in the retail pharmacy segment are expected to pressure Walgreens stock in the near term. Walgreens annualizes its Rite Aid Stores acquisition, owing to which its top-line growth rate is expected to decelerate in the low single digits sequentially.
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In comparison, higher interest expenses, a rise in outstanding share count, and reimbursement pressure are expected to hurt CVS Health’s (CVS) bottom line. However, CVS Health’s top line will likely continue to benefit from the acquisition of Aetna.
Rating and target price
The graph shows that the majority of analysts are suggesting “hold” on Walgreens stock owing to near-term sales and earnings headwinds. Of the 24 analysts covering the stock, 17 recommend a “hold,” four suggest a “buy,” and three maintain a “sell” rating.
Analysts’ consensus target price of $58.95 per share indicates an upside potential of 10.4% based on its closing price of $53.42 on May 10.