Walgreens stock sinks to lead Dow losers as reimbursement headwinds, generic deflation pressures continue

Shares of Walgreens Boots Alliance Inc. WBA, -3.73% dropped 4.1% in morning trade, enough to pace the Dow Jones Industrial Average’s DJIA, +0.35% decliners, after the drugstore chain said it continues to face reimbursement headwinds, as well as pressure from deflation of generics. Chief Financial Officer James Kehoe said at the Leerink Partners Global Health Care Conference late Thursday that since EPS growth guidance of 7% to 12% was provided: “I wouldn’t say that reimbursement is higher, what I would say is the ability to mitigate it through winning more contracts, more volume and negotiating better, is there’s less than we would have expected entering the year,” according to a transcript provided by FactSet. Leerink analyst David Larsen followed in a note to clients: “Overall, it sounds as though [Walgreens] continues to navigate several headwinds with the company explaining that reimbursement headwinds continue and the operating environment remains challenging.” Larsen added the he was “encouraged” that management has “responded,” and is committed to cutting costs. The stock has tumbled 19% over the past three months, while the SPDR Consumer Staples Select Sector ETF XLP, -0.22% has slipped 3.7% and the Dow has gained 1.9%.

Have breaking news sent to your inbox. Subscribe to MarketWatch’s free Bulletin emails. Sign up here.