Finance

Walgreens Boots Alliance stock jumps 87%, says one Wall Street analyst


It’s been a tough decade for investors in retail and pharmaceutical companies Walgreens Boots Alliance (Nasdaq: WBA)The stock has been trending downward for years as ongoing challenges dented market sentiment.

Analysts at TD Cowen remain optimistic that Walgreens stock could rebound significantly. While TD Cowen lowered its price target today to $35 from $37, it maintained a buy rating on the stock. Based on the current share price, the new price target implies an upside of approximately 87%.

Favorable risk/reward

While TD Cowen analysts don’t believe Walgreens’ results will necessarily improve, the favorable risk/reward tradeoff is the basis for the lofty price target. Walgreens narrowed its full-year guidance in March to reflect a “challenging retail environment.” TD Cowen said the new goal was achievable.

Walgreens now expected to report adjusted results Earnings per share In 2024, the company expects earnings per share to be in a range of $3.20 to $3.35, while continuing to expect the U.S. Healthcare business to break even on an adjusted EBITDA basis. Net profits have fallen off a cliff over the past few years. Walgreens reported 2021 adjusted earnings of $4.91 per share.

While earnings are declining, TD Cowen analysts are not wrong in believing that the company has considerable potential upside if it can meet its targets.At the midpoint of Walgreens’ guidance range, the stock is trading at P/E ratio 6 or less.

Is Walgreens stock a buy?

While Walgreens stock certainly has the potential to soar 87%, buying shares just because its valuation has been beaten to hell could be a recipe for disaster. Walgreens stock looked cheap for years, and the only reward investors got was in falling stock.

Walgreens could be a solid turnaround company. The company named a new CEO in October, and he has already made some tough decisions, such as cutting the dividend to preserve cash. But the stock still looks risky.

Should you invest $1,000 in Walgreens Boots Alliance now?

Before buying Walgreens Boots Alliance stock, consider the following factors:

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Timothy Green Has no position in any of the stocks mentioned. The Motley Fool has no position in any stocks mentioned. Motley Fool has disclosure policy.

Walgreens Boots Alliance stock jumps 87%, says one Wall Street analyst Originally published by The Motley Fool



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