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How Is Walgreens Boots Alliance Positioned in 2019?


Jan. 22 2019, Published 3:26 p.m. ET

WBA’s movements so far in 2019

As of January 18, Walgreens Boots Alliance (WBA) stock has risen 6.0% since the start of 2019. In comparison, the stock of its closest rival, CVS Health (CVS), is flat so far this year, while the S&P 500 Index is up 6.5% as of January 18. Walgreens stock has fallen 1.2% since it announced its fiscal 2019 first-quarter results on December 20, 2018.

Walgreens beat analysts’ earnings expectations for the quarter by $0.03 and came in marginally ahead of their sales expectations. Despite this outperformance, its stock fell 5.0% on the day of its results announcement because investors were concerned about the weakness in its UK retail business.

Overall, Walgreens stock fell 5.9%, and CVS stock fell 9.6% in 2018.

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Analysts’ recommendations

Several analysts are pessimistic about Walgreens given its reimbursement pressures, its weak retail same-store sales growth, its margin pressures, and the threat of competition from Amazon’s (AMZN) foray into the pharmacy space following its acquisition of PillPack last year.

Walgreens stock fell 4.3% on December 14 after Goldman Sachs downgraded it to a “sell” from a “neutral.” Following the company’s fiscal 2019 first-quarter results, Baird, Cowen and Company, and Leerink lowered their price targets on its stock.

On January 17, UBS initiated coverage of Walgreens with a “sell” rating and a price target of $70. On January 18, Walgreens stock had “buy” recommendations from eight of the 27 analysts following it. The stock had “hold” recommendations from 16 analysts and “sell” recommendations from three analysts. The average 12-month price target for Walgreens stock was $76.26, indicating a potential upside of 5% compared to its closing price of $72.43 on January 18.

Walgreens is optimistic about improving its business through various strategic partnerships. We’ll discuss these partnerships in the next article.


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