Following a 64% decline in 2024, Can Walgreens Boots Alliance's Stock Seek Recovery in 2025?
Walgreens Struggles, But Bullish Investors See Opportunity
Let's face it, pharmacy retailer Walgreens Boots Alliance (WBA) has had a rough go of it. The company's stock plummeted by a staggering 64% in 2024, leaving it at levels not seen in ages. In fact, it's been a tough grind for investors, with concerns about WBA's future weighing heavily on its shares.
However, the glass half-full crowd might just see potential for a turnaround play. If Walgreens can successfully cut costs and focus on profitability, maybe, just maybe, this downtrodden healthcare stock will bounce back. That depends on whether the company can deliver the goods with its recent earnings numbers, right?
Walgreens Beat Expectations in Q1 — But Are They Enough?
Last week, WBA revealed its Q1 earnings for fiscal 2025. For the period ending Nov. 30, 2024, the company managed to generate revenue of $39.5 billion, higher than analyst estimates of $37.4 billion. Its adjusted earnings per share (EPS) also surpassed analyst expectations, coming in at $0.51, compared to the expected $0.37 EPS. CEO Tim Wentworth commented that the company had made progress against its financial and strategic priorities, despite challenging circumstances.
But while it may have beat expectations, Walgreens' unadjusted earnings still painted a bleak picture. The company reported a significant loss of $245 million, up from the $39 million loss recorded in the previous year. Operating profits and losses serve as a crucial indicator of overall profitability, but with additional expenses incurred due to restructuring efforts, like the closure of stores, it's no surprise that the bottom line suffered.
The company also continued to burn through cash, totaling $140 million in cash from day-to-day operations, an improvement from the $281 million it used up in the previous year, but it remains a pressing concern.
Low Expectations Could Fuel Rally
So, is it time to place your bets on WBA? At this juncture, it's still too early to tell. Concerns over the company's financials and the prospect of true accounting profitability in the future remain. But with optimism in short supply, even these earnings beat have renewed the interest of investors.
On January 10, the stock climbed 28% from its previous closing price, advocating that any positive signs for this embattled company can spark excitement among investors. Underlying investor optimism could propel the stock to worthwhile returns for investors despite incomplete turnaround prospects.
Investing in Walgreens – Is It Worth the Risk?
WBA's Q1 2025 earnings were a positive sign, convincing some investors of the company's potential turnaround. However, several challenges loom, including high debt levels, store closures, and intense competition from tech giants diving into the healthcare sector. Investors would be wise to wait and see how the company fares in the upcoming quarters before making a solid decision, as there may still be volatile days ahead for the stock.
In the end, Walgreens Boots Alliance presents an intriguing opportunity for contrarian investors looking to capitalize on a turnaround story, but remember that risk is involved. As always, take the time to fully understand the company's assets, strategies, and market position before jumping in.
Given the current situation of Walgreens Boots Alliance, some investors might consider putting their money into the company with the hope of a turnaround. If Walgreens continues to deliver positive financial results and successfully navigates its challenges, investing in the company could potentially yield profitable returns. However, investing in Walgreens also carries significant risks, including high debt levels, store closures, and fierce competition, so it's crucial for investors to do their due diligence before making any financial decisions.
