Walgreens Downgraded by Cowen to ‘Market Perform’

Cowen downgrades Walgreens

Cowen and Company downgraded Walgreens Boosts Alliance (WBA) from “outperform” to “market perform” this morning, citing the company’s poor positioning.

As per Street Insider, analyst Charles Rhyee commented in a client note, “We’re downgrading WBA to Market Perform, as we view it as poorly positioned in the move toward value-based care. We increasingly believe ownership (CVS acq. of AET) rather than partnership (WBA’s open health hub) is necessary to realize the benefits of cost trend improvements. Without such, we see WBA potentially marginalized as more of a distribution channel and at greater risk to disruption.”

Rhyee also lowered the company’s price target to $71.00 from $77.00.

Walgreens Downgraded by Cowen to ‘Market Perform’

Walgreens has been under Wall Street’s knife throughout June and July

The Cowen downgrade was the third downgrade Walgreens has faced this month. Evercore ISI lowered Walgreens on July 10 to “in-line” from “outperform,” citing rising competition after Amazon’s PillPack acquisition, European Union fee pressure, and Brexit volatility. However, Evercore raised the price target to $67 from $64.

On July 2, Mizuho lowered its rating for Walgreens to “neutral” from “buy,” citing high valuations in the face of rising competitive threats from Amazon, no clear strategy of competing in a consolidated industry, and a lack of revenue diversification.

Walgreens was downgraded by Baird from “outperform” to “neutral,” by Jefferies from “buy” to “hold,” and by Bank of America Merrill Lynch from “neutral” to “under perform” after news of Amazon’s acquisition of PillPack on June 28.

The pharmacy giant is currently rated a 2.7 on a scale of 1 (strong buy) to 5 (sell). Its rating dropped to 2.5 from 2.3 after the Amazon acquisition. The three downgrades in July have lowered the company’s ranks still further.

Twenty-seven Wall Street analysts currently cover Walgreens. Its stock has fallen around 15% over the past six months.