Walgreens Stock Poised for a Rebound: Why Analysts Are Bullish

Stock Performance and Valuation - Walgreens Boots Alliance (WBA) stock is currently trading at $9 22, down 4 65$8 08 to $25 63 [2] - The stock is trading at 6x earnings, indicating a deep-value opportunity with a high dividend yield of 10 85$12 58, suggesting a potential 35% upside from the current price [5] Insider and Institutional Activity - Insiders own a small fraction of the stock but have not sold shares since Q1 2024, with recent buying activity from two directors and the CFO [3] - Institutional ownership is nearly 70%, with four consecutive quarters of net buying in 2024, providing strong support for the stock [3] Analyst Sentiment and Outlook - Analyst sentiment is mixed, with 26% Sell ratings, 60% Hold ratings, and 13% Buy ratings among the 15 tracked analysts [5] - The consensus forecast predicts earnings contraction to bottom in 2024, stabilize in 2026, and return to growth thereafter [8] - There is potential for an upgrade cycle to begin in late 2025, with a bias towards upside sentiment [5] Dividend and Financial Health - The company has already cut its dividend, aiding the downdraft in early 2024, but the current payout ratio is sustainable at 65% of earnings [6] - With or without Boots in the portfolio, the dividend is unlikely to change, and the balance sheet will be strengthened by capital injections [6] Strategic Changes and Market Reaction - Walgreens is planning significant changes in 2025, including potential store closures and asset trimming, which have improved the long-term outlook [8] - Rumors of a debt-financed offer to sell the company emerged in late 2024, though industry insiders are skeptical about the deal closing [9] - The potential sale of Boots, which contributed only 15% of Q4 revenue, could allow the company to focus on its core U S retail and healthcare business [9] Technical Analysis and Market Interest - The stock formed a double-bottom in 2024, with support levels confirmed by two tests and a subsequent rise to a higher support level [10] - Trading volume increased significantly in the summers of 2023 and 2024, indicating strong market interest and a potential capitulation by retail traders [8] Industry Context and Competitive Position - Walgreens is positioned as a high-yield deep-value stock with headwinds but significant upside potential [2] - The company's strategic moves, including potential divestitures and store closures, are aimed at improving long-term growth prospects [8][9]