Research Update: Walgreens Boots Alliance Inc. Outlook Revised To Stable From Negative On Stabilizing Credit Metrics And New Strategy

Despite being negatively affected by the COVID-19 pandemic, pharmacy and drug store retailer Walgreens Boots Alliance Inc.'s fiscal-year 2021 performance and credit measures met our expectations. The company's planned investments to enhance its consumer-centric health care-related offerings, which it detailed during its recent investor day, will lead to a temporary increase in its leverage. That said, we expect its leverage to improve to about 4x by the end of fiscal year 2022. Therefore, we revised our outlook on Walgreens to stable from negative and affirmed all our ratings including the 'BBB' issuer credit rating. The stable outlook reflects our expectation that the company will use cash flows to reduce debt in fiscal 2022, bringing leverage in line with our ratings.

...- Despite being negatively affected by the COVID-19 pandemic, pharmacy and drug store retailer Walgreens Boots Alliance Inc.'s fiscal-year 2021 performance and credit measures met our expectations. - The company's planned investments to enhance its consumer-centric health care-related offerings, which it detailed during its recent investor day, will lead to a temporary increase in its leverage. That said, we expect its leverage to improve to about 4x by the end of fiscal year 2022. - Therefore, we revised our outlook on Walgreens to stable from negative and affirmed all our ratings including the '###' issuer credit rating. - The stable outlook reflects our expectation that the company will use cash flows to reduce debt in fiscal 2022, bringing leverage in line with our ratings. We forecast earnings growth in the core pharmacy and retail business will offset costs to execute the new strategy....

Research Update