Should You Invest in Walgreens Boots Alliance?

OVERVIEW

Walgreens Boots Alliance is a pharmaceutical retailer that operates thousands of stores all around the world. It sells pharmaceutical drugs as well as other health and wellness products in its stores as well as its online platforms. They also operate a distribution platform in several countries to sell healthcare products to pharmacies.

Why You Should?

  1. The COVID-19 Pandemic has benefited the companies sectors. Their e-commerce sales have shot up as consumers look for their pharmaceutical, health, and wellness products to be shipped to their homes. Walgreens has also been quick to span out COVID Testing and other solutions for a safer shopping experience.
  2. Walgreens has continuously innovated their products to gain a customer base. For example, they have partnerships with Microsoft and Adobe to improve their e-commerce platforms. They have also innovated their store-fronts by modernizing them and adding new features to different stores. This will positively benefit the company in the future.
  3. Walgreens has grown its e-commerce and in-store sales over the past couple of financial years. Though these numbers are flattening, they acquired Rite Aid Stores which was one of their largest competitors. This will benefit the company in the future.
  4. Walgreens has seen rising revenues over the past couple of financial years. This has benefited the company’s future growth plans and will help them build a stronger balance sheet. In the financial year of 2019, the company reported revenues of around 136.9 billion and profits of around 4 billion. In the financial year of 2018, the company reported lower revenues of around 131.5 billion but reported profits at around 5 billion. This drop in profits during the latest financial year was caused due to a combination of restructuring and acquisitions.

Why You Should Not?

  1. The COVID-19 Pandemic has hurt Walgreens as stores are forced to close, have limited hours, and/or have limited occupancy. This hurt the company’s financial results and might hurt them in the future.
  2. The reason why I am staying away from Walgreens is because of competition. Amazon and other e-commerce stores as well as Walmart, Costco, Target, and CVS are expanding into the healthcare space. All of these companies have serious potential to drive Walgreens further into the ground. If you want a healthcare/pharmaceutical play, invest your money elsewhere.
  3. Because of these factors, the stock has underperformed the market over the past couple of years. Until they start to perform with the market again, I will not put any money into the stock.

MY OPINION

In my opinion, I will stay away from Walgreens as their core business has seen a flattening demand due to competition. However, if they turn it around, Walgreens will be a great pharmaceutical play in your portfolio.

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Aaditya Patel

Aaditya Patel

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Aaditya Patel is a writer who publishes analysis on companies publicly traded on the NYSE. Follow him @the_investing787 on Instagram for summary posts.