On Tuesday, TD Cowen adjusted its outlook on Walgreens Boots Alliance (NASDAQ:WBA), reducing the stock's price target to $35 from the previous $37 while maintaining a Buy rating. The firm revised its financial model for the company to align with the recently updated fiscal year 2024 guidance provided by Walgreens management.
The financial institution now estimates Walgreens' adjusted earnings per share (EPS) for FY24 to be $3.26, which falls within the company's revised guidance range of $3.20 to $3.35. This is a slight adjustment from the prior estimate range of $3.20 to $3.50. The analyst also estimated the U.S. Healthcare adjusted EBITDA to be $7 million, which is consistent with management's guidance of negative $50 million to positive $50 million.
TD Cowen expressed continued confidence in the investment potential of Walgreens shares, citing a favorable risk/reward profile. The firm highlighted the stock's valuation at approximately 5.8 times the FY25 consensus estimates. The analyst's comments suggest a belief in the company's ability to meet the revised targets set by management for the coming fiscal year.
Walgreens Boots Alliance has been under scrutiny as it adjusts its financial expectations and strategies. The company's management has set new targets that are considered achievable, which could potentially reassure investors and affect the stock's performance in the market.
The updated price target and maintained Buy rating reflect TD Cowen's current stance on Walgreens, taking into account the company's latest financial guidance and projections. Investors and market watchers will likely monitor how Walgreens progresses towards achieving these targets in the upcoming fiscal year.
InvestingPro Insights
Recent data from InvestingPro provides a deeper look into Walgreens Boots Alliance's financial health and market performance. With a market capitalization of $16.15 billion, the company's Price to Earnings (P/E) ratio stands at a negative -2.68, indicating that investors are currently skeptical about future earnings. This skepticism is further underscored by an adjusted P/E ratio for the last twelve months as of Q2 2024, which sinks even lower to -20.21. Nevertheless, the PEG ratio, a metric that considers both the P/E ratio and expected earnings growth, is 0.03, suggesting that the company's earnings could grow at a faster rate relative to its P/E ratio.
On the revenue front, Walgreens has seen a growth of 8.48% over the last twelve months as of Q2 2024, reaching $144.6 billion. This growth is a positive sign and aligns with the company's strategic adjustments. However, the dividend yield has seen a significant decline of -47.92% in the same period, which may raise concerns for income-focused investors.
InvestingPro Tips indicate that Walgreens' stock is trading at 53.42% of its 52-week high, with a fair value estimated at $24.32 by InvestingPro, higher than the recent analyst targets. This suggests that there could be potential for upside, according to InvestingPro's valuation models. For those interested in additional insights, InvestingPro offers more tips on Walgreens and other stocks; using coupon code PRONEWS24 can secure an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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