Walgreens Boots Alliance reported disappointing earnings for the most recent quarter, falling below Wall Street expectations. However, the news may not be significant as the company recently announced the appointment of industry veteran Tim Wentworth as its new CEO. With Wentworth’s imminent arrival and the expected replacement of the interim chief financial officer, Thursday’s financial report may have limited relevance. The company issued lower guidance for next year’s earnings, but it remains uncertain how this will be affected by Wentworth’s leadership.
Walgreens’ earnings have been declining and are well below the targets set by the executive team two years ago. The company’s core U.S. pharmacy business is facing significant challenges, and its investment in a primary and urgent care chain is not expected to be profitable for years. Despite offering a high dividend yield, shares of Walgreens have fallen by 39.5% this year, leading some analysts to question the sustainability of the dividend. Wentworth will take over as CEO in late October, inheriting a company that is in a difficult position.
Analysts have lowered their price targets for Walgreens ahead of the CEO announcement, reflecting a cautious view on the stock. Raymond James analyst John Ransom recommended that the company end its strategy of retail store leasebacks and reevaluate its dividend. Ransom also suggested slowing down the expansion of the new primary care chain. Over the past five years, Walgreens shares have dropped by 70.3%, while the S&P 500 has seen a 55.7% increase.
