Investors should monitor Walgreens' turnaround efforts as it faces challenges in its core business.

From Nasdaq: 2024-07-08 06:00:00

Investors seeking new investments have two strategies: looking at recent outperformers for growth momentum or recent underperformers for a turnaround. In the first half of 2024, Walgreens Boots Alliance (WBA) was the worst S&P 500 stock, declining 54%. Despite the dividend being cut 48%, the stock now offers a 9% yield and trades at only 3.7 times this year’s earnings guidance. However, the company faces challenges in its core pharmacy business due to PBMs cutting retail reimbursements and unprofitable healthcare segments. Walgreens is making efforts to turn things around, including potential asset sales and cost-cutting measures. The stock may be a deep value opportunity with a new CEO and profitability, but risks include time needed for changes, debt, and competitive threats like Amazon entering the pharmacy space. Investors should monitor Walgreens’ turnaround from the sidelines for now.



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