Walgreens’ stock soars on Friday as healthcare stock bounces back after being down.

Walgreens Boots Alliance, commonly referred to as Walgreens, has been a subject of considerable interest in 2024. Despite the broader market performing strongly—specifically, the S&P 500 index rising by over 20% throughout the year—Walgreens experienced a significant decline, losing approximately 64%. This underperformance was attributed to challenges in consumer spending and weak performance from the company’s primary care initiatives.

However, a ray of hope emerged when Walgreens reported its latest financial results, beating expectations across both revenue and earnings for its fiscal 2025 first quarter. This positive turn came at a time when the stock price had already shown resilience, rising by about 26% as of 12:52 p.m. ET on December 28, 2024.

In-Depth Analysis of Walgreens’ Q1 2025 Performance

For the quarter ending November 30, 2024, Walgreens demonstrated resilience with a modest year-over-year revenue growth rate of 7.5%. This performance was consistent across all of its business segments: U.S. retail pharmacy, international operations, and U.S. healthcare services. Each segment contributed positively to the overall results, showcasing the company’s ability to adapt and maintain growth despite external challenges.

In terms of profitability, adjusted earnings per share came in at $0.51, significantly exceeding the $0.37 per-share consensus estimate among analysts. This improvement was attributed to cost-cutting measures and disciplined execution of the company’s 2025 priorities. CEO Tim Wentworth highlighted the effectiveness of these efforts during his earnings call, emphasizing control over operating costs as a key driver of success.

Financial Outlook for Walgreens

Walgreens also surprised the market by maintaining its full-year adjusted earnings per share guidance range of $1.40 to $1.80. At the midpoint of this range—$1.60—the company’s stock is currently trading at a forward P/E ratio of approximately 7.2, suggesting that investors may perceive it as reasonably valued relative to its projected earnings.

Despite these positive developments, there remain significant risks associated with Walgreens’ continued success. Changes in pharmacy reimbursement models, which have impacted the company’s operations and profitability in previous years, represent one of the key challenges moving forward. However, the progress made in its turnaround plan has been encouraging, particularly as highlighted by CEO Tim Wentworth.

Should Investors Consider Acquiring Walgreens Boots Alliance?

Given the mixed performance in 2024—marked primarily by underperformance relative to market expectations and sustained headwinds—the decision to acquire Walgreens should be approached with caution. While the company has shown resilience in its Q1 2025 results, there are lingering concerns about the long-term sustainability of its business model, particularly in light of challenges such as changing reimbursement models.

Additionally, the broader market environment—marked by high interest rates and economic uncertainty—could further impact Walgreens’ ability to maintain its competitive position. As a result, investors should carefully weigh the potential rewards against the risks before considering a purchase.

Background on Walgreens Boots Alliance

Walgreens Boots Alliance is one of the largest drugstore chains in the United States, with a strong presence in both retail pharmacy and general merchandise sectors. The company has faced challenges in recent years, including shifts in consumer preferences toward online prescriptions filling and the impact of generic competition. These factors have contributed to the relatively modest performance of its stock throughout much of 2024.

In light of these challenges, it is crucial for investors to approach Walgreens with a critical eye, carefully evaluating both the company’s current performance and its ability to adapt to changing market conditions. While the Q1 2025 results represent a positive step forward, further analysis will be required to assess whether this momentum can translate into sustained growth in the coming quarters.

Conclusion

Walgreens Boots Alliance has faced significant headwinds in 2024, including underperformance relative to market expectations and challenges related to its core business model. However, the company has demonstrated resilience in its Q1 2025 results, beating earnings estimates and maintaining strong financial position. Despite these developments, investors should remain cautious about the long-term sustainability of Walgreens’ operations, particularly given the headwinds it continues to face.

For those considering an investment in Walgreens, a thorough analysis of the company’s current performance, its ability to adapt to market changes, and its long-term strategic direction is essential. While the positive Q1 results suggest potential for improvement, the broader context of 2024—marked by both challenges and opportunities—will require careful evaluation before making any investment decisions.