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Walgreens Stock Continues to Fall Due to Multiple Price Cuts

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Mar. 7 2019, Updated 8:02 a.m. ET

Walgreens stock continues to fall

Walgreens Boot Alliance (WBA) shares have taken a beating the past few days. Multiple analysts lowered their target price on the stock. On March 6, Morgan Stanley lowered its target price on Walgreens Boots Alliance stock to $67 from $77. On March 4, UBS reduced its target price to $65 from $70, while J.P. Morgan cut its target price to $84 from $91. On March 1, Baird lowered its target price on Walgreens Boots Alliance stock to $67 from $70 per share.

Analysts lowered their target prices after the FDA cracked down on Walgreens for selling tobacco products to minors. Also, pressure on the company’s earnings from price compression and increased reimbursements remained a drag.

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Walgreens Boots Alliance stock erased most of its gains. The stock has fallen 10.6% on a YTD (year-to-date) basis as of March 6. The stock has fallen 14.2% in the last four trading days. In comparison, CVS Health (CVS) stock has fallen 17.6% YTD, which reflects pressure on its earnings from higher reimbursements.

Analysts’ rating and target price

Among the analysts providing recommendations on Walgreens Boots Alliance stock, 16 recommended a “hold,” nine recommended a “buy,” and three recommended a “sell.” Analysts have a consensus target price of $75 per share on Walgreens Boots Alliance stock, which implies an upside of 22.7% based on its closing price of $61.10 on March 6.

Barring near-term headwinds, Walgreens Boots Alliance stock looks attractive on the valuation front. The stock trades at 8.7x the fiscal 2020 estimated EPS of $7.02, which seems attractive given the projected growth rate of 8.2% during that period and a dividend yield of 2.7%.

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