WBA - Embedded Expectations Analysis - 2021 08 03
Walgreens Boots Alliance, Inc. (WBA:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with a 17.7x Uniform P/E. Even at these levels, the market has bullish expectations for the firm, but management may have concerns about customer relationships, retail sales, and 2021 guidance.Specifically, management may lack confidence in their ability to enhance customer
relationships, sustain retail sales improvements, and meet their 2021 growth and capex guidance. Additionally, they may have concerns about their medical loss ratios, capital deployment priorities, and seasonal script headwinds. Moreover, management may be exaggerating the impact of front-of-store performance on their gross margin growth, the degree to which scale improves margins, and their marketing campaign's potential to capitalize on loosening UK restrictions. Furthermore, they may have concerns about reimbursement pressure, the margin drag of store optimization programs, and the expansion of their vaccination testing and diagnostics role. Finally, management may have concerns about the sustainability of benefits associated with the CARES Act.
Walgreens Boots Alliance is a holding company. Through its subsidiaries, the company is engaged in retail and wholesale pharmacy. The company's operations are organized into three divisions, which are also its reportable segments: Retail Pharmacy USA; Retail Pharmacy International; and Pharmaceutical Wholesale. The Retail Pharmacy USA division has pharmacy-led health and beauty retail offerings. The Retail Pharmacy International division has pharmacy-led health and beauty retail businesses. The Pharmaceutical Wholesale division, which mainly operates under the Alliance Healthcare brand, supplies medicines, other healthcare products and related services to pharmacies, doctors, health centers and hospitals.
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