Drugstore and pharmacy chain
Walgreens Boots Alliance, Inc. NYSE: WBA stock recently surged on its fiscal Q4 2021 earnings. The
pandemic winner looks to see a resurgence as a distributor with COVID-19 vaccinations in the post-COVID
reopening era. The Company learned many lessons during the pandemic and used its status as an essential business to further embed its locations into communities as a one-stop-shop for
COVID-19 testing and trusted pharmacy. COVID also deflected scrutiny of pharmacy benefits managers (PBMs) and the Company is focusing on wellness offerings and mass personalization to become the “pharmacy of the future”. The trust and relationships with its pharmacists and technicians have for their
patients have deepened during the last 18 months according to its president from delivering critical medications and COVID-19 testing to distributing
vaccines. The investor day guidance bolster investor sentiment spiking shares. Reversions may provide prudent investors with opportunistic pullbacks in shares of Walgreen to scale in exposure.
Q4 FY 2021 Earnings Release
On Oct. 14, 2021, Walgreens reported its fiscal Q4 2021 earnings report. The Company reported an earnings-per-share (EPS) profit of $1.17 excluding non-recurring items versus consensus analyst estimates for a profit of $1.02, a $0.15 beat. Revenues grew 12.8% year-over-year (YoY) to $34.26 billion, beating analyst estimates for $33.39 billion. Walgreens CEO Rosalind Brewer commented, “Our fourth quarter and fiscal year results exceeded expectations, driven by strong performance in our core business. Comparable U.S. pharmacy and retail sales both saw robust growth and recovery continued in our UK business as COVID-19 restrictions eased in the quarter. I remain extremely proud of our team members' unwavering commitment to meeting the needs of our patients, customers, and communities. The role of the pharmacist and local pharmacy is now more vital than ever.”
Upside Guidance
Walgreens raised upside guidance for full-year fiscal 2022 EPS between $5.31 versus $4.94 consensus analyst estimates. The Company sees long-term EPS growth between 4% to 5% over the next three years. Long term growth model EPS growth is expected in the low teens beyond fiscal full-year 2024.
Conference Call Takeaways
CEO Brewer set the tone, As we move forward, we plan to be customer-centric with a relentless focus on what they need and what they want. Hyper-localized, knowing that the best healthcare is deeply rooted in local communities. Improving outcomes, since we're absolutely convinced, we can further improve the health of our patients. Scale and momentum, which we've seen most prominently during our response to the pandemic, lowering the cost of healthcare, since there are enormous inefficiencies in the healthcare system today. Delightful customer experiences, so that our brands exceed expectations and leave lasting positive impressions. Transformational partnerships, which will allow us to achieve the quality and speed we want. And pharmacy; pharmacy at the center since this has always been and will continue to be our foundation and our key differentiator. These things will appear throughout the presentation today. And we hope that you will see how these strategies interconnect and how we intend to leverage our strengths to build our future. As I mentioned, I came to this role with a very open mind about what the Company needed and what is needed for me. Of course, based on my direct experience as a customer, a patient, a parent, and a caregiver, I already had a view. And the reactions of others when they heard I was joining the Company, gave me additional insight into the deep emotional connections our brands have. What has impressed me most are the genuine areas of strengths we have.” She concluded, “We have a strong view of how our assets can help connect this ecosystem together, creating a unique position for Walgreens and helping to demystify healthcare for consumers. Next, given the amount we have to do and the need to focus our resources, our third strategic priority is to refocus our portfolio of business interests. This will help us optimize the use of our resources, most notably, our management and executive time and our financial assets. It's absolutely critical that our portfolio of assets strongly connect back to our overall strategy.
Retail Pharmacy
Walgreens President John Standley added, “The strategic investments we are making will enable Walgreen’s retail pharmacy business to create coordinated care models that will help our customers and patients successfully manage their chronic disease and realize better health outcomes, and ultimately, make Walgreens a more valued member of the healthcare ecosystem. The strong pivot into healthcare, combined with the investments and improvements that we are making in the core business, will not only allow Walgreens to capture more share of the close to $1 trillion in the integrated pharmacy-led health and well-being market, but also grow our presence in the $1 trillion healthcare services market. And Walgreens is well-positioned to do this with our national network of approximately 9,000 convenient locations, our 26,000 pharmacies, and our 54,000 pharmacy technicians combined with the transformation of our core business to better help chronic patients successfully manage their conditions. Chronic patients make up 60% of the adult U.S. population, but incur 90% of U.S healthcare costs. And we have more access to those patients than any other provider in the care continuum. When we attract new chronic patients, they become our best patients. Today, we care for 35 million chronic patients, contributing 84% of our revenues. And there is much more we can do to help these patients have better outcomes. To complete our transformation, we're focusing on four key areas: building the pharmacy of the future, supporting and enabling our health strategy, re-imagining retail through expanded health and wellness offerings and mass personalization, accelerating our brands and digital offerings, and expanding our transformational cost management program. As we think about how we will build the pharmacy of the future to enable our healthcare strategy, our pharmacists and technicians are foundational to everything we do.”
WBA Opportunistic Pullback Levels
Using the rifle charts on the weekly and daily time frames enables a precision view of the price playing field. The weekly rifle chart formed a triple top at the $55.90 Fibonacci (fib) level. The weekly make or break has a flat 5-period moving average (MA) at $48.08 and flat 15-period MA at $48.24. The weekly stochastic is attempting to cross up after bouncing back up through the weekly market structure low (MSL) trigger at $47.53. The daily rifle chart has been uptrending but has stalled on the stochastic initial cross down as the daily 5-period MA flattens at $48.59. The daily 15-period MA is still rising at $48.04. Prudent investors can watch for opportunistic pullback levels at the $48.30 fib, $47.29 fib, $46.20 fib, $45.53 fib, $44.29 fib, and the $43.69 fib.
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