Walgreens Boots Alliance (NYSE: WBA) is scheduled to report its fiscal Q2 2022 results on Thursday, March 31. We expect the company to likely post revenue and earnings above the street expectations, primarily driven by the post-pandemic recovery in all segments and continued Covid-19 vaccine administration with the rise in demand for booster shots. The company will also benefit from its international pharmaceuticals business and the expansion of its online healthcare platform (Find Care), a trend seen in the recent past. We expect the company to navigate well in Q2 based on these factors. Not only do we expect Walgreens to post Q2 results better than the street estimates, we believe that its stock has some more room for growth, as we discuss below. Our interactive dashboard analysis on Walgreens Earnings Preview has additional details.
(1) Revenues expected to be slightly above the consensus estimates
- Trefis estimates Walgreens’ Q2 2022 revenues to be around $33.6 billion, slightly above the $33.4 billion consensus estimate.
- Revenue growth is expected to be driven by growth in all segments, including pharmacy in the US and international markets, retail, and pharmacy wholesale business, primarily led by post-pandemic recovery.
- Furthermore, the administration of Covid-19 vaccinations will also bolster the overall revenue growth. While the vaccine administration for Walgreens peaked in fiscal Q3 2021, there will still be some contribution in the near term, given the demand for booster shots.
- The US FDA authorized the second booster shot for people 50 and above yesterday. 
- on our dashboard Walgreens Revenue offers more details on the company’s revenue and its comparison with peers.
(2) EPS also likely to be above the consensus estimates
- Walgreens’ Q2 2022 adjusted earnings per share is expected to be $1.42 per Trefis analysis, marginally above the consensus estimate of $1.39.
- Walgreens’ adjusted net income of $1.5 billion in Q1 2022 reflected a solid 53% rise from its $0.9 billion figure in the prior-year quarter. This can be attributed to higher revenues and around 130 basis points expansion of operating smarts.
- For the full-fiscal 2022, we expect the adjusted EPS to be higher at $5.07, compared to the $4.91 seen in 2021.
(3) WBA stock has some more room for growth
- We estimate Walgreens’ Valuation to be $53 per share, which is 13% above the current market price of $47.
- This represents a forward P/EBITDA of 8.2x based on Walgreens’ EBITDA,
- There are near-term headwinds with the Russia and Ukraine geopolitical crisis, which may result in continued volatility in the broader markets in the near term. We believe any dips in WBA stock can be used as a buying opportunity for better gains in the medium term.
Note: P/E Multiples are based on Share Price at the end of the year and reported (or expected) Adjusted Earnings for the full year.
While WBA stock may rise in the near term, the Covid-19 crisis has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how counter-intuitive the stock valuation is for Flir Systems vs. CVS Health,
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