COVID vaccination program shot in the arm for Albertsons

Boise-based Albertsons got a shot in the arm from its inclusion in the federal program to provide COVID-19 vaccinations to the public through its pharmacies. The grocery and pharmacy retailer will receive a direct allocation of  COVID-19 vaccine once it is approved for use. The Nov. 12 announcement by the U.S. Department of Health and Human Services listed Albertsons as one of the 19 national chains included in the Federal Pharmacy Partnership Strategy for COVID-19 Vaccination.

“Ensuring access and affordability of the COVID-19 vaccine for all Americans is a top priority for the Trump Administration,” said HHS Secretary Alex Azar. “We are leveraging the existing private sector infrastructure to get safe and effective vaccines supported by Operation Warp Speed into communities and into arms as quickly as possible with no out-of-pocket costs.

COVID-19 shots

Like the other pharmacy operators in the HHS partnership program, Albertsons will provide the vaccine to all at no cost to the recipients, the same as the flu vaccine. Albertsons pharmacies also offer other immunizations, including pneumonia, shingles, and measles-mumps-rubella shots.

The 19 retail chains partnering with HHS operate 60% of the nation’s pharmacies. Albertsons alone has over 1,700 pharmacies, which makes it the ninth-largest pharmacy operator in the U.S. on the basis of sales. Rival Kroger, which operates as Fred Meyer and Smith’s in a handful of Idaho locations, is the sixth-largest pharmacy operator. Kroger is the largest pure-play grocery retailer in the country while Albertsons is hot on its heels in the number-two pure-play grocery slot.

Besides Albertsons and Kroger brands, other HHS COVID-19 vaccine partners that operate or distribute in Idaho include Costco, CVS, Rite Aid, Topco, Walgreens and Walmart.

Albertsons stock

Whether announcements about a COVID-19 vaccine really affect stock prices wasn’t apparent after the HHS announcement. On the other hand, the Nov. 16 news that Moderna had a 95%-effective vaccine nearing completion kicked the stock prices of all the pharmacy retailers into high gear for a day. Albertsons stock got a ride on that short wave of exuberance, as did Kroger, Walgreens, Walmart, Rite Aid and CVS.

After its reintroduction as a publicly-traded stock on June 26 of this year, Albertsons’ stock has had an interesting history. With a ticker symbol of ACI, for Albertsons Company Inc., the stock’s IPO price was $16 per share. The price then declined to just under $14 by July 13 and then turned around after the July 14 favorable first-quarter earnings call. The price peaked at $16.50 on July 27, the day that the official Q1 earnings report was released. Then the stock price wobbled its way downward during a pessimistic summer of rising COVID-19 cases to a low of $12.91 per share on Sept. 18.

Sept. 18 was the day that Barron’s, the leading financial investment weekly in the nation, ran an analysis stating that Albertsons was seriously undervalued. Ever since then, the price has risen on a steady stream of mostly good news, barring the usual wobbles in price due to market volatility.

The second quarter earnings news came out on Oct. 10 and continued the favorable performance for both earnings and growth. Adding to the good news, Albertsons announced its first dividend of $0.10 a share for class A and A-1 common stock on Oct. Stock price has been above $15 for most of November.

While it may be irksome for Albertsons to always be chasing Kroger’s statistics, this probably won’t change anytime soon. Just in terms of sales, Kroger will continue to generate more revenue because it has approximately 500 more stores than Albertsons (just over 2,750 stores versus around 2,250).

There is one thing where Albertsons currently has a foot up over its rival: it’s currently a better stock value. Since July, Kroger’s stock (NYSE: KR) has been more than the twice the price of Albertsons’ stock, yet its most recent dividend was only 180% of Albertsons’.