Walgreens Boots Alliance (WBA) gave its first quarterly report (fiscal 2015 second quarter) since the closing of the Walgreens-Alliance Boots merger on Dec. 31. With all of this huge company’s moving parts, few would argue that the financials were tough to decipher.

News headlines seized on WBA’s plan to close about 200 U.S. stores under its cost reduction program, which runs to the end of fiscal 2017. Yet Alex Gourlay, executive vice president at Walgreens Boots Alliance and president of Walgreens, said in the 2Q report conference call that the company expects to open about the same number of stores during that time.

William Blair & Co. analyst Mark Miller acknowledged the difficult read on WBA’s second quarter but had a positive take on the company’s results.

“While the extensive adjustments to operating earnings and business consolidation have complicated the analysis, we see clear directional improvement in the
underlying performance,” Miller wrote in a research note on Thursday. “Leaving aside the benefits of an accelerated deal closing and elimination of the three-month reporting lag for the Alliance Boots business — which contributed to upside versus analyst projections — Walgreens’ domestic operations generated stronger-than-projected comp-store sales (both pharmacy and front end) and expense management.”

He also noted that WBA’s fiscal 2015 adjusted EPS guidance of $3.45 to $3.65 “should not be a concern” despite being a bit below analysts’ consensus estimate of $3.62. WBA also reiterated its fiscal 2016 guidance of $4.25 to $4.60.

“Fiscal 2015 is a year of transition, and we also perceive there is appropriate conservatism in the forecast,” Miller explained. “The reaffirmation of fiscal 2016 guidance is encouraging, particularly with adverse currency translation, and the expectation for an incremental $500 million of cost savings (above the $1 billion incoming objective) enhances the multiyear EPS potential by more than 30 cents.”

William Blair & Co. projects WBA’s adjusted EPS at $3.70 for fiscal 2015 and at $4.35 for fiscal 2016.

“We understand the motivation to take an appropriately conservative approach as the company [WBA] begins to provide annual guidance, for the first time in the 16 years that we have covered the company,” Miller wrote.