In a report released today, Daniela Bretthauer from HSBC downgraded Walgreens Boots Alliance (WBA – Research Report) to a Sell, with a price target of $20.00.
Daniela Bretthauer’s Sell rating on Walgreens Boots Alliance (WBA) stock stems from a multitude of reasons related to the company’s current challenges and industry conditions. Bretthauer notes that while new leadership with extensive experience has been appointed, the company faces significant hurdles ahead. These include structural issues within its core pharmacy operation, difficulties in the healthcare segment, and cash flow constraints. Despite efforts to improve cost management and cash flow – such as reducing the dividend and selling part of its stake in Cencora – these measures may offer only short-term respite without a stable improvement in margins and cash flow.
The analyst also points out four major headwinds facing Walgreens in 2024: reduced income from sale and leaseback deals, pressure on U.S. retail gross margins due to increased shrink levels and an unfavorable sales mix, a decline in pharmacy prescription volumes along with pharmacy reimbursement challenges, and macroeconomic pressures. While there are positive aspects such as cost-saving initiatives and a favorable tax rate, these are overshadowed by the negative factors. Consequently, Bretthauer has lowered the earnings per share (EPS) estimates for 2024-26 below consensus and company guidance, leading to a reduced target price and a downgrade from Hold to Sell (Reduce).
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Walgreens Boots Alliance (WBA) Company Description:
Retail pharmacy leader Walgreens Boots Alliance (NASDAQ:WBA) operates through its namesake brand Walgreens in the U.S. and Boots in the U.K. In addition, it owns retail and business brands including the No7 Beauty Company, Duane Reade, Ahumada in Chile, and Benavides in Mexico. The company also targets equity investments in healthcare, pharmacy, and retail and has a presence in over 25 countries with more than 450,000 employees.
Read More on WBA:
- Petco names Holly May as Chief Human Resources Officer
- Walgreens Announces Executive Appointment and Retirement
- Walgreens Announces Key Executive Appointments and Retirement
- Walgreens Boots Alliance appoints Elizabeth Burger as CHRO
- Cencora announces common share repurchase from Walgreens Boots Alliance
