Walgreens Boots Alliance Retail Pharmacy Business Improvement and Company Feedback … [+]
The improvement in Walgreens Boots Alliance’s retail pharmacy business and comments from the company’s chief executive are convincing Wall Street that the drugstore chain is unlikely to be headed for a private equity buyout anytime soon.
Fiscal first-quarter earnings were revealed Friday, which showed a larger net loss than a year earlier but some operating improvements in the companies’ businesses, following a report a month ago in the Wall Street Journal that Walgreens was is considering a sale to private equity firm Sycamore Partners. .
Walgreens continues to deny that report, saying executives do not comment on rumors or speculation. The potential for an acquisition was not even addressed by Walgreens CEO Tim Wentworth during a call with Wall Street analysts and investors on Friday.
“In US pharma, we maintained scenario market share, our international business continued to show strong returns and our US healthcare segment contributed somewhat above expectations and a combination of revenue growth and cost control,” said Wentworth on a call with analysts and investors on Friday. after releasing earnings for the company’s first quarter that ended Nov. 30 last year. “Importantly, we began to make progress on opportunities that we consider essential to our long-term turnaround.”
Meanwhile, analysts who follow Walgreens see Friday’s jump in the company’s stock price of more than 25%, bringing more market value to the company and making it less likely that private equity can afford the iconic chain. pharmacies.
“While neither solid earnings nor rising stock accelerates our expected timeline for Walgreens’ eventual turnaround, we think continued execution of the footprint optimization plan and a more consistent reading of sustainable performance should continue to raise depressed stock further.” Keonhee Kim, equity analyst at Morningstar, wrote in a report issued Friday after Walgreens released its earnings report. “After a long period of volatility, we think Walgreens still needs a few more quarters of good execution of its strategy to gain investor confidence, but we believe long-term investors with patience can realize significant growth.” of our estimate of fair value in between. term.”
To be sure, Walgreens expects to increase the pace of store closings as part of its “optimization plan” as it continues the process to sell its stake in primary care company VillageMD that has already cost the company several billion dollars.
“In terms of store closings, we mentioned about 70 in the next quarter, but for the full year, on track and prepared for almost another 450,” Wentworth told analysts.
Meanwhile, analysts believe Walgreens is turning the corner without the help of private equity.
“Walgreens’ first-quarter 2025 earnings report confirms that the company’s turnaround is officially underway after an incredibly difficult 2024 that saw it finish as S&P’s worst-performing stock for the year,” the analyst said Friday. of Emarketer, Rajiv Leventhal. “And CEO comments Tim Wentworth ‘committed to a retail pharmacy-led operating model that will drive Long-term value makes the rumored sale to PE firm Sycamore Partners less likely.’
