Analyst: this is why Walgreens stock slid on Thursday despite market-beating results

Walgreens Boots Alliance Inc. (NASDAQ: WBA) published its earnings report for the fiscal third quarter on Thursday that topped analysts’ estimates for earnings and revenue. Shares of the company still slid about 7% on Thursday morning.

Glen Santangelo’s comments on Walgreens’ earnings report

Commenting on the quarterly results, Guggenheim analyst Glen Santangelo, who has a buy rating on WBA, said:

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“The company’s operations seem to be benefiting consistent with the reopening. We believe the results are strong enough to support the shares today, but we appreciate investors are still looking to better understand how the new CEO’s long-term strategy may differ from previous management. Given the long-term structural challenges to the retail pharmacy business, we believe investors may take a wait and see approach on the stock until the strategy becomes more transparent.”

Financial performance

Walgreens said its net income in the third quarter came in at $1.197 billion that translates to $1.38 per share. In the comparable quarter of last year, it had posted $1.708 billion of loss, or $1.95 per share.

On an adjusted basis, the pharmacy retailer earned $1.15 per share in Q3. It generated $34.03 billion of sales in the recent quarter versus the year-ago figure of $30.36 billion. According to FactSet, experts had forecast $33.49 billion of sales and $1.16 of adjusted EPS.

Guidance for the full year

For fiscal 2021, Walgreens now forecasts up to 10% growth in its adjusted per-share earnings. It had previously expected an under 10% increase in its full-year adjusted EPS. According to the pharmaceuticals holding company, it has so far administered over 25 million doses of COVID-19 vaccines.

In the third quarter, Walgreens completed the divestment of its Alliance Healthcare pharmacy business to AmerisourceBergen Corp.

Other notable figures

Other notable figures in Walgreens’ earnings report on Thursday include a 6.4% annualised growth in U.S. comparable sales, with pharmacy climbing by 8.4% and retail surging 1.7%. Vaccination accounted for a six-percentage point increase in Q3. International sales were up over 75%.

In the prior quarter (Q2), Walgreens had missed sales estimates.