12:25 PM EDT, 06/28/2024 (MT Newswires) -- Walgreens Boots Alliance's ( WBA ) lower-than-expected Q3 earnings stemmed from a weak consumer environment and challenges in the pharmacy industry, Morgan Stanley said in a note Friday.

The company reported Q3 adjusted earnings Thursday of $0.63 per diluted share, missing Morgan Stanley's estimate and consensus of $0.69 and $0.71, respectively, according to the note.

The company lowered its 2024 EPS outlook to $2.80 to $2.95 from $3.20 to $3.35 previously, reflecting the Q3 miss and implying a "notably weaker" Q4, the note said.

"Its lowered guidance reflects the latest EPS miss and management does not expect an improvement in the [US] retail environment and anticipates muted script volume growth and continued pressures on pharmacy margins in [Q4]," Morgan Stanley said in the note.

For 2025, Morgan Stanley said the company does not expect significant improvement in US consumer spending and anticipates some pharmacy industry headwinds to continue.

Morgan Stanley maintains an underweight rating on Walgreens and lowered its price target to $9 from $13.

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