Walgreens, the second-largest pharmacy chain in the U.S., is set to report earnings before the bell Thursday.
One possible tail wind during its recent quarter could come from an increase in sales – health insurer UnitedHeathcare reported Wednesday that it saw growth in its drug benefits business as well as an overall increase in prescription volume during its recent quarter.
Separately, a report from JPMorgan showed that consumers had increased their spending on household cleaners, soaps and vitamins – products that could contribute to overall sales at Walgreens.
"Walgreens trades very cheaply from a valuation standpoint [with] a nice dividend yield … and they generate a lot of free cash flow yield but they have not solved the riddle on the front end of the store," John Petrides, portfolio manager at Tocqueville Asset Management, told CNBC's "Trading Nation" on Wednesday.
Front-end store sales include over-the-counter medications and other products not sold at the pharmacy. Walgreens' overall retail sales – which factor in store closures –decreased 0.7% in its third quarter ended in May, though comparable retail sales rose by 1.9%. Comparable pharmacy sales increased at a faster 3.5% rate.
"We all know that the pharmacy side of the business is strong, but the front end of the store has seen declining comps for what seems like an eternity," said Petrides.
Matt Maley, chief market strategist at Miller Tabak, agreed that it is a "cheap" stock. However, he is wary on its potential for long-term gains.
"The stock has been making a series of lower highs and lower lows for five years now. I mean over the last five years, the stock is down 60%, while the market has been up 70%," said Maley during the same "Trading Nation" segment.
It could be setting up for a short-term post-earnings bump, though, Maley added.
"I don't love it right here, but on a short-term basis traders could see a pop. If these earnings take the stock above $37.25, that will take it above its trend line from the beginning of the year and above a little mini double top from September and earlier in October, that should give the stock a nice little boost," Maley said.
"Traders can keep a good eye on that for an upside breakout, but longer term it's got a lot more to prove before we can really turn constructive on the name," said Maley.