03:08 PM EDT, 03/25/2024 (MT Newswires) -- Walgreens Boots Alliance's ( WBA ) tax and cost-cutting measures are expected to bolster Q2 earnings, UBS Securities said in a report emailed Monday.

UBS expects the company's Q2 EPS to align with consensus estimates despite weaker front-end sales and international segment earnings. These may be mitigated by savings from VillageMD pharmacy store closures and a lower-than-expected tax rate, UBS said.

"We expect management to reiterate its [fiscal-year 2024] full-year EPS guidance of [$3.20 to $3.50] and potentially increase its existing cost-reduction guidance of [$1 billion] to help support that guide," UBS said, adding that it also expects weaker free cash flow due to pharmacy benefit manager reimbursement changes.

"If correct, this quarter will likely not provide conviction enough to get incrementally positive or negative on the stock in the near-term," UBS said.

Overall call volume for the company has decreased post-Q1 report as investors recognize Chief Executive Tim Wentworth's strategy will take time. Sentiment varies: some are positive about valuation and growth potential, while others worry about EPS guidance for F24 and think estimates for 2025 and 2026 are too high, particularly in retail and healthcare segments, UBS said.

UBS has a neutral rating on Walgreens Boots Alliance ( WBA ) with a 12-month price target of $25.

Price: 20.60, Change: +0.02, Percent Change: +0.12