What’s happening: Walgreens Boots Alliance is scheduled to report its second-quarter results before the opening bell on Thursday, April 2.
What happened: Walgreens will be one of the first major US healthcare companies to report earnings since the pandemic gripped the country. Earnings from America’s largest drugstore chain will be an early indicator of the healthcare segment’s performance amid the COVID-19 outbreak.
There’s been a steep decline in Walgreens’ shares so far in 2020, especially after the company reported dismal results for the first quarter. Expectations for the second quarter call for a massive decline in earnings. Despite this, investor sentiment for this stock has recently turned positive.
The consensus revenue estimate stands at $35.24 billion, representing 2.1% year-over-year growth.
The estimate for earnings is $1.46 per share, an 11% decline from the same quarter in the previous year.
Why it matters: Even as most businesses are impacted by stay-at-home orders due to the coronavirus outbreak, retail drugstores are considered essential services and are allowed to remain open across the US.
US pharmacy chains are witnessing heavy footfall and spike in their online sales, with customers stocking up on personal care items, toilet paper, hand sanitizers and disinfectants. Last month, Rite Aid announced that its sales had surged around 10 times from normal levels since coronavirus hit the country.
Walgreens stands to gain even more, given global spread of the virus and the fact that the company has a presence in over 25 countries.
Walgreens is taking various initiatives to meet the rising demand. It has partnered with courier company Postmates to expand its on-demand delivery across the country. The company also announced a plan to enable customers to buy non-prescription items from drive-thru pickup windows at all its stores. Moreover, the pharmacy chain major is hiring over 9,500 full- and part-time employees.
Walgreens is investing heavily in technology and has plans to expand its partnership with Indian tech firm Tata Consultancy Services to boost its digital transformation.
How the shares have performed so far: Shares of Walgreens have taken a beating so far in 2020, falling around 27% year to date. The stock has recently found favour among investors and has risen almost 4% in the last five trading days.
What to watch: After posting disappointing results in the previous quarter, Walgreens is under pressure to beat estimates this quarter. Lower reimbursement rates from insurers and a decline in the prices of generic drugs could hurt the company’s earnings. Investors will be keeping an eye on the company’s outlook, expecting healthy sales growth.