Walgreens stock can't seem to get out of its tailspin.
Sometimes it can seem like a stock is a falling knife, where trying to slow its fall is just going to cut you. That's what Walgreens Boots Alliance (WBA 0.65%) investors may be feeling right now. The stock has dropped to levels it hasn't traded at since the 1990s, and it keeps falling lower. The price drop suggests that the market knows that Walgreens faces a tough road ahead.
Walgreens is working to regain the market's confidence. With a new CEO, there's some hope that things could get better for the business. All indications, though, suggest it will take a while before that happens. But how low could the stock go till then?
Are investors better off selling their shares in this struggling retailer, or is it a better move to simply hang on and wait at this point?
Where analysts see the stock going
Analysts take on the task of researching a stock in detail to give their clients (and sometimes the general public) an informed evaluation of how much (if any) potential there is for the stock to perform. When an analyst sets a price target, it typically covers a period of 12 months or so. Based on the consensus analyst price target of $23.57 as of June 10, Walgreens shares could rise by nearly 50% over the next 12 months from where they trade today.
But before you rush out and buy the stock based on that forecast, it's important to remember that analysts routinely update their price targets. And the last five analysts covering this stock who set price targets have lowered them. As that continues to happen, the consensus average will come down. What remains encouraging is that four of the past five targets are still higher than where the stock trades right now, so even despite the downgrades, analysts still believe the stock should be worth more in the near term.
What does Walgreens' valuation say about the stock?
While analyst price targets can be helpful when gauging a stock's potential, it's always important to do an independent evaluation. This can be done by looking at earnings and book multiples. Currently, Walgreens trades at just 5 times its estimated future earnings and right around its book value.
That seems cheap, but let's consider a bit more context. For one thing, Walgreens has struggled with profitability. In each of the past four quarters, it incurred an operating loss. This has been a low-margin business and that isn't likely to change, especially as it focuses on launching health clinics -- a venture that even low-cost leader Walmart doesn't appear to think is worth the effort. While opening health clinics may present Walgreens with a new growth opportunity, it may not necessarily be a hugely profitable one.
Based on earnings, Walgreens looks like a potential value trap because future profitability is by no means a guarantee, despite the company's efforts to cut costs. Although it's trading near its book value, investors would be right to demand a discount for the healthcare stock given the risk involved with the business.
Walgreens stock may be cheap, but it's far from a no-brainer buy
Although it may not be easy, if you're still hanging on to Walgreens in your portfolio, now may be as good a time as any to cut your losses. Even under new management, there's no guarantee that it will be in better shape in a year or two. The company's core business is still pharmacy retail, which isn't highly profitable to begin with, and it's not made any easier with competitors like Walmart and Amazon to contend with.
I wouldn't be surprised if Walgreens stock were to continue to fall lower in the months ahead and potentially dip below a $10 billion market cap. It's tempting to think that perhaps this time, with the stock down 40% year to date, it has finally bottomed out, but that's a risky assumption to make.
Even if you are bullish on Walgreens stock at this price point, the safer option would be to sell now and keep an eye on the company to see if its turnaround plan is successful. You might miss out on some gains if it ends up going in the right direction, but you could also avoid further losses in case things don't go according to plan.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Walmart. The Motley Fool has a disclosure policy.
FAQs
The average price target for Walgreens Boots Alliance is $21.00. This is based on 11 Wall Streets Analysts 12-month price targets, issued in the past 3 months. The highest analyst price target is $35.00 ,the lowest forecast is $13.00. The average price target represents 72.27% Increase from the current price of $12.19.
Why is Walgreens stock so low? ›
Walgreens (NASDAQ: WBA) has experienced a significant decline in 2023, with shares down over 55% year-to-date, trading at levels last seen in 1998. The company faces challenges, including underperforming stores, pressure from pharmacy benefit managers (PBMs), and a $5.8 billion write-down from an overpaid acquisition.
What is the stock price forecast for WBA in 2024? ›
Walgreens Boots stock price stood at $12.10
According to the latest long-term forecast, Walgreens Boots price will hit $15 by the end of 2024 and then $17 by the end of 2025.
What is the intrinsic value of Walgreens Boots Alliance? ›
As of today (2024-06-27), Walgreens Boots Alliance's Intrinsic Value: Projected FCF is $46.03. The stock price of Walgreens Boots Alliance is $12.20.
What is the WBA forecast for 2025? ›
Walgreens Boots Alliance stock prediction for 1 year from now: $ 22.70 (91.38%) Walgreens Boots Alliance stock forecast for 2025: $ 11.19 (-7.47%) Walgreens Boots Alliance stock prediction for 2030: $ 7.59 (-37.25%)
Will WBD stock go up? ›
WBD Stock 12 Month Forecast
Based on 17 Wall Street analysts offering 12 month price targets for Warner Bros in the last 3 months. The average price target is $12.50 with a high forecast of $20.00 and a low forecast of $7.00. The average price target represents a 68.01% change from the last price of $7.44.
Is Walgreens Boots Alliance a buy? ›
Is Walgreens Boots Alliance stock a Buy, Sell or Hold? Walgreens Boots Alliance stock has received a consensus rating of hold. The average rating score is and is based on 5 buy ratings, 37 hold ratings, and 10 sell ratings.
What is the outlook for Walgreens stock? ›
According to S&P Global Market Intelligence, the average analyst target price for WBA stock is $21.52, representing implied upside of more than 82% to current levels. Despite the significant implied upside, the consensus recommendation is a Hold.
What is the future of Walgreens? ›
Expect a leaner, smaller footprint
One of the things that's likely to happen over the next decade is that Walgreens becomes smaller in size. The company has a lot of physical store locations, but that means a higher level of staffing needs and resources. It also comes with more costs and challenges.
Who owns the most stock in Walgreens? ›
Largest shareholders include Vanguard Group Inc, BlackRock Inc., State Street Corp, Wellington Management Group Llp, Jpmorgan Chase & Co, Invesco Ltd., Franklin Resources Inc, Capital World Investors, Nordea Investment Management Ab, and Northern Trust Corp .
How often does WBA pay dividends? ›
Regular payouts for WBA are paid quarterly.
What rank is Walgreens Boots Alliance? ›
As of 2022, Walgreens Boots Alliance is ranked #18 on the Fortune 500 rankings of the largest United States corporations by total revenue.
How much debt does Walgreens Boots Alliance have? ›
Total debt on the balance sheet as of February 2024 : $33.62 B. According to Walgreens Boots Alliance's latest financial reports the company's total debt is $33.62 B.
What is Walgreens Boots Alliance rating? ›
Evercore ISI analyst Elizabeth Anderson CFA maintained a Hold rating on Walgreens Boots Alliance (WBA – Research Report) today and set a price target of $10.00. The company's shares closed yesterday at $12.19. According to TipRanks, Anderson CFA is an analyst with an average return of -8.9% and a 37.18% success rate.
What is the forecast for Walgreens stock? ›
According to the research reports of 16 Wall Street equities research analysts, the average twelve-month stock price forecast for Walgreens Boots Alliance is $19.00, with a high forecast of $30.00 and a low forecast of $9.00.
Will Smith and Wesson stock go up? ›
SWBI Stock 12 Month Forecast
Based on 2 Wall Street analysts offering 12 month price targets for Smith & Wesson Brands in the last 3 months. The average price target is $18.00 with a high forecast of $18.00 and a low forecast of $18.00. The average price target represents a 25.52% change from the last price of $14.34.
What is the stock price of Under Armour 52-week high and low? ›
The Under Armour 52-week high stock price is 9.50, which is 35.9% above the current share price. The Under Armour 52-week low stock price is 6.18, which is 11.6% below the current share price. The average Under Armour stock price for the last 52 weeks is 7.50.
What is WBA 52-week high and low? ›
The Walgreens 52-week high stock price is 31.32, which is 99.5% above the current share price. The Walgreens 52-week low stock price is 14.62, which is 6.9% below the current share price. The average Walgreens stock price for the last 52 weeks is 22.21.
