Dow Jones Takes 250 Points On Coronavirus Fears; Walgreens beats on revenue and profits; IBM announces cloud offerings
Confirmed cases of the coronavirus are increasing in Europe and many US states, raising fears that a winter wave of COVID-19 will force renewals of stay-at-home and foreclosure orders that are crippling economic recovery.
The recovery is already fragile and uneven: Initial state unemployment claims for the week ending October 10 rose to 898,000, still well above pre-pandemic levels. the Dow Jones Industrial Average (DJINDICES: ^ DJI) was down about 0.9% as of 10:50 a.m. EDT Thursday.
Actions of Alliance of Walgreens boots (NASDAQ: WBA) managed to win despite the weakness of the market after the drugstore chain released strong quarterly results and guided for earnings growth next year. Meanwhile, a flurry of cloud offerings from International Business Machines (NYSE: IBM) was not enough to keep the stock from driving the market down.
Walgreens beats its profits
Sales rose and profits fell for drugstore chain Walgreens in its fiscal fourth quarter as key markets in the US and UK gradually improved. Revenue jumped 2.3% to $ 34.7 billion, beating analysts’ expectations of $ 390 million, while adjusted earnings per share fell 28% to $ 1.02. While EPS was down, the adjusted figure was $ 0.06 ahead of analysts’ average estimate.
US retail drugstore sales jumped 3.6% to $ 27.0 billion in the fourth quarter despite store closings. Filled prescriptions rose 1.6% as prescription volume trends improved, although the company says it lost some of the retail prescription market in the quarter.
The international retail pharmacy business did not fare as well, with sales falling 14.9% to $ 2.3 billion. Comparable store sales at Boots UK fell 29.2% as customer visits to stores remained depressed, particularly in locations linked to train stations, airports and busy shopping streets. One bright spot: Boots online sales rose 155% in the quarter, partially offsetting weakness in stores. E-commerce was also strong in the United States, with Walgreens.com sales up 39%.
The pharmaceutical wholesale business helped increase total sales with revenue increasing 4.3% to $ 6.0 billion. This growth was driven by emerging markets, Germany and France. On the bottom line, profits fell due to the pandemic, lower gross profit at U.S. drugstores, and changes in premiums. Walgreens estimates that COVID-19 reduced its adjusted EPS by $ 0.46.
By 2021, the company expects the impact of the pandemic on financial results to gradually diminish. Adjusted EPS is expected to rise a small single-digit percentage next year, with strong growth expected in the second half of the year. This growth in the second half of the year will be driven by the expected decrease in the impacts of the pandemic and investments in omnichannel capacities.
Walgreens shares rose about 3% Thursday morning, even as the broader market collapsed. The stock is still down around 37% year-to-date.
IBM concludes cloud deals
Technology giant IBM made some notable announcements on Thursday regarding its cloud, artificial intelligence (AI) and blockchain businesses:
- He announced a teleconsultation solution running on IBM Cloud developed with Santa Casa da Misericordia de Lisboa, a Portuguese charity. The cloud-based platform will allow patients to plan and access teleconsultation services and medical care remotely from their phones while reducing the need to travel for treatment.
- The company built a disaster recovery site using IBM Cloud for the on-site data center of Kazakh copper producer KAZ Minerals. The solution, which is built using IBM Cloud bare-metal servers, automates the process of migrating, recovering and testing virtual machine workloads. Using IBM’s cloud allows KAZ Minerals to avoid the additional capital expenditure associated with setting up an on-premise system.
- The Compagnie maritime de la Méditerranée and the French company CMA CGM are now integrated into CommerceLens, a blockchain-based platform running on IBM Cloud that aims to digitize the global shipping industry. The TradeLens ecosystem now includes over 175 organizations, and the platform has tracked 30 million container shipments, 1.5 billion events, and 13 million published documents.
- IBM and Service now announced that they have expanded their strategic partnership. A new joint solution will be available this year that, according to the announcement, combines “the hybrid AI-based cloud software and professional services from IBM with the intelligent workflow capabilities of ServiceNow and market leader IT services and operations management products. “
IBM made headlines last week when it announced that it was split from its extensive infrastructure services business. The move will allow IBM to focus more on hybrid cloud computing, AI and other areas with long-term growth potential.
IBM shares fell with the market on Thursday, down 1.1% in the morning. The stock has lost around 7% of its value this year.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.