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Walgreens Boots Alliance (NASDAQ: WBA), better known as Walgreens, was one of the worst-performing stocks of 2024. Although the S&P 500 index rose by more than 20% for the year, Walgreens dropped by a staggering 64% due to consumer spending headwinds and poor performance from its primary care business efforts.
However, shareholders finally got a reason to smile when the company reported its latest results. Walgreens beat expectations on both the top and bottom lines for its fiscal 2025 first quarter, and shares spiked higher as a result. As of 12:52 p.m. ET Friday, Walgreens stock was up by about 26%.
Digging a little deeper
For the quarter, which ended Nov. 30, Walgreens reported 7.5% year-over-year revenue growth, and all of its business segments (U.S. retail pharmacy, international, and U.S. healthcare) posted revenue growth.
Thanks to the company's cost-cutting efforts, adjusted earnings came in at $0.51 per share, significantly more than the $0.37 per share analysts had expected.
"Our first quarter results reflect our disciplined execution against our 2025 priorities," CEO Tim Wentworth said in the earnings press release. He went on to specifically mention controlling operating costs as a catalyst.
Is Walgreens a buy?
Walgreens also surprised the market by maintaining its full-year adjusted earnings per share guidance range of $1.40 to $1.80. So at the midpoint, Walgreens is trading for about 7.2 times expected earnings.
Of course, there are some big ongoing risk factors for the company, such as addressing changes to pharmacy reimbursement models that also contributed to its poor 2024 performance. But the early progress in the turnaround plan has been impressive, and the stock could end up being a bargain if management can execute. Just keep in mind that this is a big "if."
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