Walgreens Faces Market Challenges Despite Recent Stock Gains
Walgreens Boots Alliance, Inc. (WBA), based in Deerfield, Illinois, is a major player in the integrated healthcare, pharmacy, and retail sectors. The company boasts a market capitalization of $8.2 billion, dividing its operations into segments including U.S. Retail Pharmacy, International, and U.S. Healthcare.
Catagorized as a “mid-cap stock,” Walgreens, with its market cap exceeding $2 billion, holds a significant position in the pharmaceutical retail industry. It serves millions of customers across thousands of locations in the U.S., Europe, and Latin America.
Stock Performance: A Roller Coaster Ride
WBA’s stock has experienced a dramatic decline of 65.6% from its 52-week high of $27.05, reached on January 2. On a more positive note, the stock has rebounded by 8.6% over the past three months, outperforming the SPDR S&P Retail ETF (XRT), which saw only a 4.7% increase during the same period.
Long-Term Struggles
Looking at a longer time frame, Walgreens has struggled significantly. The stock plummeted by 41.8% over the past six months and 64.5% over the past year. In contrast, XRT has risen by 5.8% in the last six months and 11.2% in the past year.
The bearish sentiment surrounding WBA is emphasized by its consistent performance below the 200-day moving average over the last year, along with staying mostly beneath its 50-day moving average since mid-January, with only minor fluctuations recently.
Recent Financial Results Show Mixed Outcomes
A notable rise of 15.8% in Walgreens’ stock occurred after the company announced its Q4 results on October 15. Its adjusted non-GAAP EPS reached $0.39, exceeding Wall Street estimates by 8.3%. Additionally, sales climbed nearly 6% year-over-year to $37.5 billion, surpassing analysts’ predictions by 5.1%. However, the company has continued to face declining profitability owing to severe competition from e-commerce, leading to squeezed profit margins. Adjusted net earnings fell by 40.9% year-over-year to $340 million, resulting in a slim adjusted net margin of just 90 basis points.
Furthermore, WBA stock rose an additional 17.7% on December 10 following a report from The Wall Street Journal regarding discussions with private equity firm Sycamore Partners to potentially take Walgreens private.
Comparisons and Analyst Outlook
Walgreens has lagged behind its competitor, CVS Health Corporation (CVS), which experienced a 28.1% decline over the last six months and a 44% drop over the year.
While Walgreens has seen some recent stock price gains, analysts maintain a cautious view. The consensus rating among the 15 analysts covering WBA is “Hold.” The average price target stands at $9.87, indicating a 6.1% premium compared to current price levels.
On the date of publication, Aditya Sarawgi did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
