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What Analysts Recommend for Walgreens after Q2

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Apr. 3 2019, Updated 10:27 a.m. ET

Analysts suggest “hold”

Most analysts maintain a “hold” rating on Walgreens (WBA) stock. Walgreens stock is trading at a forward PE multiple of 8.5x, which is about 45% lower than its four-year historical average multiple of 15.5x. The company’s low valuation makes it an attractive bet. However, near-term sales and margin headwinds are expected to limit the upside in Walgreens stock.

In comparison, rival CVS Health (CVS) is also trading at a significant discount. However, reimbursement pressure, similar to that for Walgreens, is expected to hurt its bottom line and restrict the upside.

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After Walgreens’s second-quarter earnings, Credit Suisse reduced its target price to $70 per share from $79. Meanwhile, Baird lowered its target price to $57 from $67. Also, Jefferies reduced its target price to $55 from $73.

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Rating and target price summary

Of the 26 analysts providing ratings on Walgreens stock, 16 suggest a “hold,” seven analysts have a “buy,” and three analysts recommend a “sell.” Analysts have a consensus target price of $64.62 per share, which implies a 16.7% based on its closing price of $55.36 on April 2. Analysts have a “buy” recommendation on CVS Health stock.

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