(09 January 2020)DAILY MARKET BRIEF 1:More Bad News for Walgreens, the Worst-Performing Stock in the Dow

For Walgreens Boots Alliance shareholders, the bad news keeps rolling in. After wrapping up 2019 as the worst-performing stock in the Dow Jones Industrial Average, the company delivered worse-than-expected fiscal first-quarter earnings and revenue Wednesday morning, sending shares falling. Walgreens stock was trading down 6.5%, at $55.46. It has lost 23.3% over the past 12 months, compared with the S&P 500's gain of 25.6%. The company said it brought in $34.3 billion in revenue and $1.37 per share in earnings during the first quarter. That was below Wall Street's expectations of $34.6 billion in revenue and earnings of $1.41 per share. Revenue growth clocked in at a paltry 1.6% year over year, which is even lower than the 4% growth the company posted over the course of 2019. Walgreens CEO Stefano Pessina described the results as "soft" in a statement, but said the company was sticking to its full-year guidance. "We are confident our strategic plans are the right ones to drive long-term sustainable growth going forward," he said. The company has been battered by twin challenges. First, by the falling reimbursement rates insurance companies pay for prescription drugs, which effectively cuts away at the profit margins of the pharmacy business, and second, by the struggles of its retail business, where margins were already thin and e-commerce is changing customer shopping habits.

By Peter Rosenstreich