Shares of Walgreens are advancing more than 5% after the pharmaceutical company reported 4Q adjusted earnings of $1.02 per share, which came ahead of analysts’ expectations of $0.96. Its revenues of $34.7 billion beat the Street consensus of $34.4 billion.
Walgreens’ (WBA) sales grew 2.3% year-over-year, while earnings declined 27.9% on a constant currency basis, due to the adverse impact of COVID-19. Adjusted operating income fell 27.7% year-over-year to $1.1 billion. Looking ahead, the company said that it expects low single-digit earnings growth in fiscal 2021 on a constant currency basis.
Walgreens’ CEO Stefano Pessina said, “Despite uncertainty amid the global COVID-19 pandemic, we are seeing gradual improvement in key U.S. and UK markets and continued strong performance in our wholesale business. I’m also encouraged by the accelerating growth in our e-commerce platforms.” (See WBA stock analysis on TipRanks).
Ahead of the 4Q results, on Oct. 8, Barclays analyst Steve Valiquette lowered the price target on the stock to $40 (11.4% upside potential) from $45 and maintained a Hold rating based on a weaker expectation of EBIT within its international segment. The analyst sees challenging trends in the U.K. with lower volumes and higher operating costs.
The Street is in line with Valiquette’s outlook with a Hold analyst consensus, which breaks down into 8 Holds and 2 Sells. The average price target of $38.78 implies about 8% upside potential at current levels. Shares have dropped about 39.1% year-to-date.