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Walgreens Aims For Rapid Growth

Oct. 19, 2021 5:29 AM ETWalgreens Boots Alliance, Inc. (WBA)21 Comments
William Meyers profile picture
William Meyers


  • Walgreens is becoming a healthcare provider.
  • Guidance for post-2024 is 11% to 13% per year EPS growth.
  • Expanded profits will be dependent on expansion of primary health care offerings.

BCFC/iStock Editorial via Getty Images

Walgreens, the best-known part of Walgreens Boots Alliance (NASDAQ:WBA), at least in the U.S., mostly brings to mind a chain of brick-and-mortar stores filling prescriptions and selling typical drugstore sundries. However, according to its executives, a transformation has already begun that will accelerate

This article was written by

William Meyers profile picture
I provided stock and bond research and analysis to a small cap specialist investor, Lloyd Miller, from 2002 until his death in January 2018. For my own account I invest mainly in technology and biotechnology stocks. My technology and investment web site is openicon.com, where readers can view the notes I take to make decisions and to write articles for Seeking Alpha.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of WBA, BMY, GILD, SBLK either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (21)

Ray Strack profile picture
The issue is they are no longer the corner drug store offering convenience, friendly service, and expertise. They are too busy trying to cut costs - they can't maintain adequate or competent staffing from mid-level on down. They will become a second rate CVS at this rate..
@jwsmock LOL. Have you been to a CVS lately? At their store nearest me, the aisles are a mess. The prices are insane. There are no checkout cashiers...all self-checkouts, which I hate. CVS has mastered the technique of not even paying minimum wages to the customers that check themselves out. I avoid going there for anything except an emergency prescription.
Ray Strack profile picture
@Frank Investor Exactly right. This is where Walgreens is headed.
New and exciting concepts every month! Ready, fire, aim. WBA has had many damp squibs.
only one problem...Amazon pharmacy is on line. Costco pharmacy beats them all. Express Scripts owns the government and medicare.
Peter Jaworowski profile picture
Thanks for the nice summary article. I think the plan is sound and has potential, and it addresses the most pressing issue for Walgreens which is getting people in the door. I like that the plan provides focus and a long term vision.

I really like the focus on expanding their branded soaps, cosmetics, and even Walgreens branded items. These are unique and get people in the door.

However, I still have a few questions...

I think in the out years showing 3-3.5% share repurchases a year is much too optimistic. Either the stock will be cheap and WBA will be using that money to grow, or the growth will be happening which will make the stock expensive and I think its highly unlikely they'll be able to repurchase that amount per year.

There was no mention of the Kroger trial or LabCorp partnership. I'm assuming these are ending? I really don't know.

While the stores with the Health Corners and VillageMD locations will get people in the door, looks like that at most that will cover around 20%-30% of the stores. The other stores might still benefit from someone picking up their prescription, but I feel they will still struggle with getting people in the door.

Not too many specifics on merchandising besides the possibility of selling some healthier items. This has been a problem for a long time now, Walgreens is generally a more expensive option and with consumers better able to do price comparisons there just isn't much reason to go to Walgreens unless you are there for another reason. This is pretty tricky. Analysts keep asking about tobacco sales, but since no one would buy tobacco online or comparison price shop for it, this is a huge money maker for WBA, but unfortunately it goes against their healthier image.
CareCentrix is bottom of the barrel company with a failed business model in need of a bailout
Ray Strack profile picture
Old Charles Walgreen and Uncle Jim Tyson would not be pleased...
Ray Strack profile picture
They can't keep their pharmacies open because many pharmacists are quitting.
@jwsmock and what are they going to do with their Pharmacology degrees. Y=There is only room for so many drug company reps. A wage raise may drive costs up for WBA, but it will also drive costs up for their competition. So either we will have less stores, which plays into the WBA location advantage, and drive down costs, or we will get a raise in the price of scripts, which will go to the bottom line of all the pharmacies.
Ray Strack profile picture
@mrdruss move on to other businesses where they are still pharmacists not shot givers and test takers.
bbob68 profile picture
@jwsmock Such as ??
Dividend Ambassador profile picture
They are copying CVS strategy. I would do the same if I were WBA CEO. That said, CVS is further along in execution.
William Meyers profile picture
@killiondt Good point. One question is, a few years down the road, will they be eating each other's pie, or will one or both manage to grow at the expense of less efficient healthcare providers? No one can really predict that. Like I said, while waiting to see the results, at least we can enjoy the dividend.
@killiondt you are correct in that thesis, but in many mkts. WBA has the prime locations.
@killiondt Methinks that the healthcare distribution system will be about scale in the future, like everything else. Only the giants can fully utilize 5G, AI, govt regulations, edge cloud etc. CVS and WBA will be survivors, and probably thrivers over the next decade. I like Rosalind, the new CEO of WBA!
Value Investment Club profile picture
Agree, I want to support them and I think the strategy makes sense, need to be more than a retail company. Execution from this new CEO will determine if her word is real gold or fools gold. Wishing her and her team much success given my long position. Until then, collect the dividend and sleep well that it's a valuable franchise.
Ry The Investor Guy profile picture
Thank you for the update! Fingers crossed they are able to execute… we shall see.
This will be a matter of execution.
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