![]() The expectations in lower gross margins on prescription medicines and weaker retail sales drove George Hill, an analyst at Deutsche Bank, to cut his target price on Walgreens’ stock from $51 to $43 despite upgrading his rating from sell to hold. Walgreens’ domestic prescription sales accounted for more than 55% of its annual revenue, according to the company’s 2019 annual report. 1, 2020, lower than the actual growth rate of 2.8% and 4.9% in the first and second quarters, respectively. ![]() Goldwasser predicted the comparable sales of prescription medicines to increase 0.9% year-over-year domestically in the fiscal year 2021 that begins Sep. However, prescription sales can decline again in fall and winter when people curb their visits to stores for fear of a second surge in COVID-19 infection, she said in an interview. Goldwasser sees pent up demand in prescription medicines and expects the trend to continue until July. Walgreens’ decline in sales of prescription medicines might be smaller than the general market and will be narrowed as patients refill prescriptions and doctors reopen offices, Rhyee said in his note. “The management team has not communicated a clear strategy of how they are going to restructure the business and materialize partnerships.”Ĭharles Rhyee, an analyst at Cowen and Company, said in a May 19 note that the recent underperformance of Walgreens was “overdone,” despite slashing his 52-week price target from $54 to $48. “Walgreens was going through structural challenges before COVID-19 and is going to accelerate post COVID-19,” Goldwasser said. The drug retailer must overcome its $22 billion of lease obligations and reassess its store footprint, along with its digital transformation, Goldwasser said in an interview. “We question whether consumers will favor using digital and mail pharmacies over brick and mortar post COVID-19,” Morgan Stanley analyst Ricky Goldwasser, who rates Walgreens as equal-weight and has a 12- to 18-month price target of $49, wrote in a note to clients on April 2. ![]() The company would “dramatically accelerate” its digital transformation over the next six to 12 months, Kehoe said during the call. Walgreens partnered with Postmates for home delivery of over-the-counter medications, household essentials and convenience products, according to a March 31 press release. The stock recorded a 52-week low at $36.65 on May 14 and a 52-week high at $64.5 on Nov. Walgreens shares closed at $43.55 Friday, down 26% since the beginning of 2020. Jones has a 52-week price target price of $41 on Walgreens’s stock and a sell rating. “It is unclear at this point how this will trend through the rest of the third financial quarter and beyond, though we think there is a risk comps could remain negative as COVID-19 continues to keep consumers indoors,” Goldman Sachs analyst Robert Jones wrote in a note published April 3. However, some analysts are worried that the weakness of in-store purchases may pose significant challenges to Walgreen’s domestic and international sales over the coming months. “We are confident that this is a temporary situation, and we would expect to see some stabilization of sales trends over time,” Kehoe said. However, comparable sales shrank after March 21, when stay-at-home orders were enforced across the U.S. consumers stockpiled prescriptions and cleaning products, Chief Financial Officer James Kehoe said during the second-quarter earnings conference call on April 2. Walgreen’s comparable sales rose 26% in the first three weeks of March as U.S. has traded near a seven-year low since executives said in early April that comparable sales started to decline due to the coronavirus pandemic, reflecting Wall Street’s concerns about the company’s post-shelter-in-place recovery in what is likely a recession.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |