WBA – Market expectations are for Uniform ROA to rebound, but management may have concerns about relationships, sales, and guidance

• Walgreens Boots Alliance, Inc. (WBA:USA) currently trades below recent averages relative to UAFRS-based (Uniform) earnings, with a 17.6x Uniform P/E. Even at these levels, the market has bullish expectations for the firm, but management may have concerns about customer relationships, retail sales, and 2021 guidance.
  
• Specifically, management may lack confidence in their ability to enhance customer relationships, sustain retail sales improvements, and meet their 2021 growth and capex guidance. Additionally, they may have concerns about their medical loss ratios, capital deployment priorities, and seasonal script headwinds. Moreover, management may be exaggerating the impact of front-of-store performance on their gross margin growth, the degree to which scale improves margins, and their marketing campaign’s potential to capitalize on loosening UK restrictions. Furthermore, they may have concerns about reimbursement pressure, the margin drag of store optimization programs, and the expansion of their vaccination testing and diagnostics role. Finally, management may have concerns about the sustainability of benefits associated with the CARES Act.