Wednesday, Mizuho maintained a Neutral rating on Walgreens Boots Alliance (NASDAQ:WBA) but lowered the price target to $19 from $23, ahead of the company's fiscal third-quarter 2024 earnings report set for this Thursday. The investment firm's revision reflects concerns over lower earnings per share and cash flow visibility for the pharmacy-led health and wellbeing company.
The firm's updated fiscal year 2024 estimates now sit at the low end of Walgreens' guidance, indicating caution regarding the company's financial performance. The revised price target of $19 takes into account the analyst's expectations of continued challenges in the retail sector throughout the year.
Despite the reduction in the price target, the firm anticipates that Walgreens' 2024 guidance will be buoyed by several factors. These include approximately $1 billion in targeted cost savings for the fiscal year, improved profitability in the U.S. Healthcare business, a projected tax benefit in the second half of fiscal 2024, and more favorable year-over-year retail comparisons in the latter part of the year.
The analyst's comments suggest that while there are positive elements that could support Walgreens' financials, the current retail environment and visibility issues are significant enough to warrant a more cautious valuation of the company's shares.
In other recent news, Walgreens Boots Alliance reported its second quarter 2024 earnings, with an adjusted earnings per share (EPS) of $1.20. The company also adjusted its full-year EPS guidance to $3.20 to $3.35, reflecting the challenging US retail landscape.
Meanwhile, Truist Securities lowered its price target for Walgreens from $25 to $20, maintaining a Hold rating. TD Cowen also adjusted its outlook, reducing the stock's price target to $35 from $37, while retaining a Buy rating. In contrast, Morgan Stanley (NYSE:MS) cut its price target to $20 from $21, keeping an Underweight rating on the stock.
InvestingPro Insights
As we approach Walgreens Boots Alliance's earnings report, a glance at real-time data from InvestingPro offers a deeper financial perspective. With an adjusted market capitalization of $13.54 billion and a striking dividend yield of 6.37%, Walgreens demonstrates a significant return to shareholders relative to its market value. The company has also seen a revenue growth of 8.48% in the last twelve months as of Q2 2024, which is a positive indicator of its business momentum despite the challenges in the retail sector.
InvestingPro Tips suggest that the Price / Book ratio of 1.01 and a PEG Ratio of 0.02 could imply that the stock is potentially undervalued, considering the company's assets and growth trajectory. Additionally, with the InvestingPro Fair Value estimated at $19.86, slightly below the revised Mizuho price target, investors might find the current share price an attractive entry point. For those considering a deeper dive into Walgreens' financials, InvestingPro offers a wealth of additional tips – in fact, there are 5 more tips available for investors seeking to make an informed decision.
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