Walgreens Boots Alliance Inc
Walgreens Boots Alliance, Inc. (NASDAQ: WBA) is an integrated healthcare, pharmacy and retailing company. The Company operates through three segments: U.S. Retail Pharmacy, International, and U.S. Healthcare.
Recent Financial and Business Updates:
- WBA's Q3 sales increased by 8.6% YoY, reaching USD 35.4 billion, or 8.9% when adjusting for currency fluctuations.
- This growth was driven by strong sales in U.S. Retail Pharmacy, International segments, and significant contributions from U.S. Healthcare.
- However, the company reported an operating loss of USD 0.5 billion in Q3, compared to a USD 0.3 billion loss in the previous year, mainly due to a non-cash impairment charge of USD 431 million related to pharmacy license intangible assets in Boots UK.
- Adjusted operating income, excluding impairments, reached USD 1.0 billion, with a modest 0.6% increase when adjusted for currency fluctuations. This improvement was driven by better performance in U.S. core pharmacy and international segments, partially offset by lower COVID-19 vaccination and testing volumes, planned investments in U.S. Retail Pharmacy payroll, and expenditures in U.S. Healthcare.
- Net earnings for the quarter were USD 118 million, a decrease from USD 289 million in the same quarter last year, mainly due to lower operating income. Adjusted net earnings, which account for operating income adjustments, reached USD 860 million, reflecting a 3.4% increase when adjusted for currency fluctuations, primarily attributed to improved adjusted operating income.
- Earnings per share (EPS) in Q3 were USD 0.14, down from USD 0.33 in the previous year. Nevertheless, adjusted EPS showed resilience, increasing by 3.3% to USD 1.00, or 3.6% when accounting for currency effects, despite facing a significant 19.5% headwind related to COVID-19.
- In terms of cash flow, WBA reported a net cash usage of USD 20 million in operating activities during Q3. Free cash flow, representing available cash after accounting for operating and capital expenses, showed a negative value of USD 444 million, marking a substantial USD 1.7 billion decrease compared to the same quarter last year. This reduction was primarily driven by changes in working capital timing and increased capital expenditures, including investments in growth initiatives and U.S. Healthcare projects.
Technical Observation (on the daily chart)
The price of WBA stock has shown a consistent downward trend after making 52-week high, correcting around 45.41%. Currently, the stock is near an important support zone of USD 21.50-USD 23.50, from where price has taken support in the past. The RSI (14 period) momentum indicator is currently in the oversold zone with a value of 16.65, with expectations of some consolidation or a short-term upside momentum. Moreover, the price is currently positioned below both the 21-day SMA and 50-day SMA trend-following indicators, which may act as dynamic short-term resistance levels.
As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Speculative Buy’ rating has been given to Walgreens Boots Alliance, Inc. (NASDAQ: WBA) at the current price of USD 23.22 as of September 05, 2023, at 07:40 am PDT.
Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario.
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
How to Read the Charts?
The Yellow colour line reflects the 21-period simple moving average (SMA) while the blue line indicates the 50- period simple moving average (SMA). SMA helps to identify existing price trends. If the prices are trading above the 21-period and 50-period moving average, then it shows prices are currently trading in a bullish trend.
The orange colour line in the chart’s lower segment reflects the Relative Strength Index (14-Period) which indicates price momentum and signals momentum in trend. A reading of 70 or above suggests overbought status while a reading of 30 or below suggests an oversold status.
The red and green colour bars in the chart’s lower segment show the volume of the stock. The volume is the number of shares that changed hands during a given day. Stocks with high volumes are more liquid than stocks with lesser volume as liquidity in stocks helps in easier and faster execution of the order.
The Orange colour lines are the trend lines drawn by connecting two or more price points and used for trend identification purposes. The trend line also acts as a line of support and resistance.
Technical Indicators Defined: -
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
The reference date for all price data, currency, technical indicators, support, and resistance levels is September 05, 2023. The reference data in this report has been partly sourced from REFINITIV.
Abbreviations
CMP: Current Market Price
SMA: Simple Moving Average
RSI: Relative Strength Index
USD: United States dollar
Note: Trading decisions require a thorough analysis by individual. Technical reports in general chart out metrics that may be assessed by individuals before any stock evaluation. The above are illustrative analytical factors used for evaluating the stocks; other parameters can be looked at along with additional risks per se. Past performance is neither an indicator nor a guarantee of future performance.
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