Wall Street’s ratings on WBA
Walgreens Boots Alliance (WBA) is a well-covered stock. The company is tracked by 27 analysts and has a rating of 2.7 on a scale of 1 (strong buy) to 5 (sell).
WBA’s ratings have deteriorated continuously over the past year, with more significant downgrades coming after Amazon’s acquisition of PillPack in June.
WBA had a rating of 2.0 in October 2017. Its rating deteriorated to 2.3 in June as analysts from Leerink Swann lowered it from an “outperform” to a “market perform,” analysts from Morgan Stanley lowered it from an “overweight” to an “equal weight,” and analysts from Raymond James lowered it from an “outperform” to a “market perform.”
Analysts’ recent actions
Analysts turned bearish on Walgreens after Amazon acquired PillPack. At least six analysts lowered their ratings on the company in June and July.
WBA was lowered from a “neutral” to an “underperform” by Bank of America Merrill Lynch, from an “outperform” to a “neutral” by Braid, and from a “buy” to a “hold” by Jefferies in June. While most analysts believe that Amazon’s PillPack acquisition is unlikely to have a near-term impact on Walgreens, the company’s earnings could be affected in the long run.
Mizuho lowered Walgreens to a “neutral” from a “buy” in early July, citing high valuations in the face of rising competition from Amazon, a lack of clear competitive strategy in a consolidated industry, and a lack of revenue diversification.
Evercore ISI also lowered WBA to an “in line” from an “outperform,” rating, again due to competitive threats after Amazon’s PillPack acquisition, EU fee pressures, and Brexit volatility. Cowen & Company also downgraded WBA from an “outperform” to a “market perform” at the end of July.