Why Walgreens stock will fall 64% in 2024
Shares of Walgreens Boots Alliance (NASDAQ: WBA ) Last year’s sharp decline in vaccine demand, consumer-focused spending and errant purchases led to a series of disappointing earnings reports from the company.
As a result, Walgreens was forced to cut its dividend, incur a multibillion-dollar impairment charge, and b Dow Jones Industrial Average (DJINDICES: ^DJI). From the information base S&P Global Market IntelligenceIn the year In 2024, the stock fell by 64%. As you can see from the chart, the stock has fallen steadily over most of the year as the plan has declined.
Walgreens has fallen steadily through the first three quarters of the year, and Wall Street’s outlook for the stock has darkened as the company missed estimates and cut guidance. During the fourth quarter, the stock seems to be stable, but there are no signs of recovery yet.
Walgreens already started cutting the gap in early January when the lowlights reported first-quarter earnings. The company cut its dividend 48% to $0.25 per quarter. It also maintained its adjusted earnings per share guidance of $3.20-$3.50 for the period.
In its second quarter report, in late March, Walgreens took another $5.8 billion goodwill impairment on VillageMD and dropped another bombshell on investors. He acquired the primary care and urgent care business through diversification and vertical integration, but it became clear that he had grossly overpriced the business. Walgreens paid $5.2 billion in 2021 to increase its stake in VillageMD from 30% to 63%, though its growth strategy in the business has not developed. It also narrowed its adjusted EPS guidance to $3.20-$3.35 for the quarter.
Walgreens’ worst day of the year came on June 27, when the stock fell 22% on another disappointing earnings report. This time, it lowered its full-year EPS guidance to $2.80-$2.95 due to challenging pharmaceutical industry trends and a weak consumer environment.
Almost everything that could have gone wrong for Walgreens last year did, but it showed signs of recovery in its first-quarter earnings report earlier this month. While management expects adjusted earnings of just $1.40-$1.80 per share this year, the business appears stable, and the bottom line is growing.
For dividend investors, Walgreens now appeals, a Dividends 10.9%, it should be safe if the business is stable.
