Walgreens Stock: Why Analysts Lowered the Target Price



Earnings pressure

Recently, numerous analysts lowered their target price on Walgreens Boot Alliance (WBA) stock. On March 27, Cowen lowered its target price to $66 from $75. At the beginning of March, Morgan Stanley reduced its target price to $67 from $77. UBS cut its target price to $65 from $70, while J.P. Morgan lowered its target price to $84 from $91. Baird cut its target price to $67 from $70 per share.

Higher reimbursement pressure on earnings, weakness in the United Kingdom, and tough YoY (year-over-year) comparisons are keeping analysts on the sidelines. The FDA’s stance on selling tobacco products to minors also impacted investors.

Article continues below advertisement

Among the 26 analysts tracking Walgreens, 16 recommended a “hold,” seven recommended a “buy,” and three recommended a “sell.” Analysts have a target price of $72.86 per share on Walgreens, which implies an upside of 17.1% based on its closing price of $62.23 on March 27. In comparison, analysts recommended a “buy” on CVS Health (CVS) stock.


Walgreens stock trades at 9.7x it’s fiscal 2019 estimated EPS of $6.43, which looks attractive based on the projected growth rate of 7% in the EPS and a current dividend yield of 2.9%.


More From Market Realist