Analyst Note| Soo Romanoff |
Narrow-moat Walgreens reported normalized first-quarter earnings notably ahead of CapIQ consensus. The beat was driven by a broad-based recovery across the segments as well as the traction of cost savings initiatives. The wild swings in market sentiment had adversely pressured shares but the stabilization noted in the quarter, anticipated second-half recovery, and 4% dividend provide stability in an increasingly challenging economic environment. Based on the reported performance, we have raised our internal estimates and as a result increased our fair value estimate to $50, up from $42 per share.