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Could Walgreens Boots Alliance’s Stock Rebound After Its Q4 Report?

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Written by Timothy Sykes Reviewed by Jack Kellogg Fact-checked by Ellis Hobbs

Could Walgreens Boots Alliance’s Stock Rebound After Its Q4 Report?

Walgreens Boots Alliance Inc.’s stock surged by 6.57 percent on Friday, buoyed by significant positive developments that could reshape the company’s future. Key among these is the announcement of new strategic partnerships and initiatives aimed at expanding healthcare services and enhancing operational efficiency. Additionally, upbeat market sentiment following a favorable earnings report has further propelled the stock upward. This combined optimism continues to attract investor interest, driving the stock price higher.

Key Points:

Candlestick Chart

Live Update at 13:27:04 EST: On Friday, September 27, 2024 Walgreens Boots Alliance Inc. stock [NASDAQ: WBA] is trending up by 6.57%! Discover the key drivers behind this movement as well as our expert analysis in the detailed breakdown below.

  • JPMorgan lowered the price target on shares to $15 from $20 but keeps an Overweight rating on Walgreens Boots Alliance’s stock.

  • TD Cowen’s 9th Annual FutureHealth Conference showcased Walgreens’ commitment to healthcare, with notable speeches to be webcast live.

  • Walgreens is facing a class-action lawsuit due to financial performance issues and reduced revenue guidance influenced by U.S. Retail Pharmacy business challenges.

  • Walgreens will close its stores for Thanksgiving, except for select 24-hour locations and pharmacies.

  • Key financial metrics reveal a mixed bag, with substantial revenues but challenges in profitability and debt.

A Quick Overview of Walgreens Boots Alliance’s Recent Earnings and Financial Metrics

Walgreens Boots Alliance is an enormous player in the healthcare and retail pharmacy market, and its recent financials show a mixed picture. Revenues are massive, hitting $139.1 billion, but profit margins are squeezed, with a gross margin sitting at 18.4% and a net profit margin of -4.02%. Fiscal strength metrics tell a tale of heavy leverage; the debt-to-equity ratio stands at a staggering 2.4, while the current ratio is precariously low at 0.7, indicating liquidity concerns. The free cash flow of $742 million, though robust, struggles to balance out long-term debt that recently reached $28.79 billion.

From a cash flow perspective, Walgreens managed to generate positive operating cash flows of $604 million, while investing activities brought in an additional $204 million. However, financing cash flows revealed immense outflows, primarily due to debt repayments totaling $818 million.

The multi-day chart data hints at a slight upward trend recently, with closing prices inching up to $9.085 on 27 Sep 2024. Meanwhile, the stock has seen a significant fluctuation within the same day, peaking at $9.1 and dipping to as low as $8.6. Over a more granular view, intraday charts reveal some interesting patterns, with minor upticks followed by steadier declines—a classic sign of a stock under pressure.

Overall, the financial metrics combined with the stock’s recent price behavior paint a picture of a company grappling with its balance sheet while navigating industry-wide challenges.

News Affecting Walgreens Boots Alliance’s Stock Dynamics

JPMorgan’s Revised Price Target:

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On Aug 30, 2024, JPMorgan revised the price target for Walgreens Boots Alliance down to $15 from $20 but maintained an Overweight rating. This downgrade originates from uncertainties surrounding the company’s ability to pivot amidst industry disruption. The downward revision hints at skeptical optimism, despite encouraging elements in Walgreens’ long-term strategy. Investors always like a clear path, but doubts linger here.

Walgreens at the FutureHealth Conference:

Walgreens marked its footprint at TD Cowen’s 9th Annual FutureHealth Conference, underscoring its stratagem in healthcare. Chief Clinical Trials Officer, Ramita Tandon, highlighted their emerging integrated service offerings. The event underscored the company’s potential growth, yet the immediate market response reflected cautious optimism. The future looks promising as Walgreens battles to redefine its industry role.

More Breaking News

Class-Action Suit:

The class-action lawsuit against Walgreens, dated Aug 30, 2024, accentuates financial performance woes and guidance cuts. The suit—a stark reminder of the company’s ongoing challenges—could exert downward pressure on the stock. Legal troubles are seldom welcomed by investors, especially amid existing fiscal difficulties. This legal hurdle adds layers of complexity to Walgreens’ recovery narrative.

Thanksgiving Store Closures:

On Sep 16, 2024, Walgreens announced that most stores would stay closed on Thanksgiving, except 24-hour locations. This move reflects sensitivity towards employee welfare and operational streamlining, possibly enhancing the brand’s public image. Yet from a short-term fiscal lens, this decision might carry undisclosed revenue losses, higheing the stakes as the market awaits more substantial strategic maneuvers.

Revised Price Targets and Reduced Store Closures:

TD Cowen slashed Walgreens’ price target from $22 to $16 on Sep 12, 2024, citing slower than expected store closures as part of its optimization scheme. The revised target mirrors growth struggles, underlining the need for a swift and effective turnaround. Walgreens has been striving to find equilibrium amidst changing consumer dynamics and this Snark aptly describes the cautious sentiment around its trajectory.

How the News Impacts WBA Stock and Market Sentiment

Recent news around Walgreens Boots Alliance’s stock does not spell doom and gloom alone—it is a void filled with complexities, opportunities, and risks.

JD Morgan’s downgrade nudges toward a cautious stance but retains an optimistic ‘Overweight’ rating. This paradoxical message places Walgreens in a peculiar spot—investors are compelled to weigh potential growth against immediate uncertainties.

The strategic showcase at the FutureHealth Conference underlines Walgreens’ initiatives to elevate its healthcare influence, a market burgeoning with potential. This move holds the promise of future growth, yet the market’s wide eyes wait for palpable success stories that could boost the stock.

A class-action lawsuit is never stock-friendly news, adding legal headwinds to existing operational turbulence. Investors bristle at unpredictability, and legal woes rattle those foundations. This development could prompt a temporary retreat in the stock as stakeholders assess the potential fallout.

The decision to close stores on Thanksgiving extends goodwill to employees, potentially fostering a better brand image, a critical factor in an industry driven by trust. It may not sway the stock north immediately but could build long-term trust—a pivot that’s always appreciated.

TD Cowen’s reduction in price target and reflective optimism on reduced store closures highlight the need for Walgreens to recalibrate its operational strategies swiftly. This adjustment period, though taxing, may carve a sharper focus on efficiency but also risks temporary setbacks.

Conclusion: The Road Ahead

Walgreens Boots Alliance stands at a crossroads. News of revised price targets and legal battles may cast a shadow, but glimmers of optimism remain in strategic growth moves and operational refinements.

Investors must navigate this landscape carefully. With significant growth efforts underway in healthcare and prospects of operational optimization, Walgreens holds promise but is laced with complexities. The coming months are pivotal as analysts and stakeholders alike watch how Walgreens steers through these turbulent waters. Will the strategic pivots yield the desired stability and growth, or will the shadows of legal and financial hurdles loom larger? Only time will unfold these layers, making Walgreens Boots Alliance a stock to watch closely as it maneuvers through these challenges towards a redefined horizon.

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Timothy Sykes

Tim Sykes is a penny stock trader and teacher who became a self-made millionaire by the age of 22 by trading $12,415 of bar mitzvah money. After becoming disenchanted with the hedge fund world, he established the Tim Sykes Trading Challenge to teach aspiring traders how to follow his trading strategies. He’s been featured in a variety of media outlets including CNN, Larry King, Steve Harvey, Forbes, Men’s Journal, and more. He’s also an active philanthropist and environmental activist, a co-founder of Karmagawa, and has donated millions of dollars to charity. Read More

* Results are not typical and will vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here

The available research on day trading suggests that most active traders lose money. Fees and overtrading are major contributors to these losses.

A 2000 study called “Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors” evaluated 66,465 U.S. households that held stocks from 1991 to 1996. The households that traded most averaged an 11.4% annual return during a period where the overall market gained 17.9%. These lower returns were attributed to overconfidence.

A 2014 paper (revised 2019) titled “Learning Fast or Slow?” analyzed the complete transaction history of the Taiwan Stock Exchange between 1992 and 2006. It looked at the ongoing performance of day traders in this sample, and found that 97% of day traders can expect to lose money from trading, and more than 90% of all day trading volume can be traced to investors who predictably lose money. Additionally, it tied the behavior of gamblers and drivers who get more speeding tickets to overtrading, and cited studies showing that legalized gambling has an inverse effect on trading volume.

A 2019 research study (revised 2020) called “Day Trading for a Living?” observed 19,646 Brazilian futures contract traders who started day trading from 2013 to 2015, and recorded two years of their trading activity. The study authors found that 97% of traders with more than 300 days actively trading lost money, and only 1.1% earned more than the Brazilian minimum wage ($16 USD per day). They hypothesized that the greater returns shown in previous studies did not differentiate between frequent day traders and those who traded rarely, and that more frequent trading activity decreases the chance of profitability.

These studies show the wide variance of the available data on day trading profitability. One thing that seems clear from the research is that most day traders lose money .

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Citations for Disclaimer

Barber, Brad M. and Odean, Terrance, Trading is Hazardous to Your Wealth: The Common Stock Investment Performance of Individual Investors. Available at SSRN: “Day Trading for a Living?”

Barber, Brad M. and Lee, Yi-Tsung and Liu, Yu-Jane and Odean, Terrance and Zhang, Ke, Learning Fast or Slow? (May 28, 2019). Forthcoming: Review of Asset Pricing Studies, Available at SSRN: “https://ssrn.com/abstract=2535636”

Chague, Fernando and De-Losso, Rodrigo and Giovannetti, Bruno, Day Trading for a Living? (June 11, 2020). Available at SSRN: “https://ssrn.com/abstract=3423101”