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Walgreens: Healthcare Segment Growth Potential May Not Offset Overall Weak Margin

Waterside Insight profile picture
Waterside Insight


  • Recent healthcare acquisitions in the US provide rapid entry into the retail healthcare space with great potential in the coming years.
  • Heavy costs and expenses drag on the margin don't show signs of improvement.
  • Operating cash flow at risk of further declining.

Walgreens Boots Alliance Headquarters. WBA brought together Walgreens and Alliance Boots pharmaceuticals.


Investment Thesis

Company Overview

Walgreens Boots Alliance (NASDAQ:WBA) is an integrated healthcare, pharmacy, and retail store chain, founded in 1901 and headquartered in Deerfield, Illinois. It has over 13,000 locations worldwide, with portfolio retail and business brands including Walgreens, Boots, and Duane Reade. Its operations are conducted

This article was written by

Waterside Insight profile picture
We are data-oriented investors with over 20 years of investment experience in stocks, fixed income, forex, commodities futures, and options with success. With our unique approach, we provide independent opinions and insights focused on discovering medium-term investment opportunities. Waterside Insight is a wholly-owned subsidiary of RootBanyan Capital Management LLC.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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Comments (16)

17939962 profile picture
Good analysis. This is a cheap stock. There is an old saying : 'you get what you pay for'. Finance jargon defines it as a 'value trap'.
Management is trying to buy their way out of a rut with acquisitions. But the company is too big to be significantly affected by even a successful acquisition, and the company aready has the problem that it is too huge to be easily manageable. They should pursue the improvement of internal efficiencies. Operating improvements might distance them from the ultimate fate of bankruptcy.
I don't believe the author comments share buybacks, but that issue is mentioned in other articles ; a dumb thing to do : as a shareholder why do I want management to use my money to buy more of this low-growth, low-margin retail operation? And in any case buybacks are a shell game : on paper it results in perceived better earnings per share. But that is achieved at the expense of a weakened balance sheet as it means the company is financed by more debt and less equity.
I couldn't find any major news for today as to why $WBA down as much as 3.5% to $32. Any idea?
@Ronaldo123 CVS slightly lowered their guidance. Sector down. Algos are programed to complete the cycle and take WBA to previous low.
@Minor Enthusiast $CVS is touching 52-week low. Wouldn't $CVS is a better and safe bet over $WBA? I own some $WBA in my portfolio and not $CVS.
@Ronaldo123 CVS and WBA are in the same boat as hedge funds are shorting the entire sector. CVS is farther along in its transformation than WBA, which may imply that WBA has greater potential not yet reflected in its earnings. Both have the potential to improve as the sector is definitely oversold.
Ignore his recommendation. Back up your truck and load hand over fist, or you can wait till stock price recovers to $50 buy there and catch a casual ride down to $30.
Oil Can profile picture
Why is this stock in freefall today? Looking for some news but can't find anything...
Just added a significant portion at the same price as CEO ROZ Brewer who bought 340 million dollars. Like me, she obviously thinks WBA is going higher. Along with CVS, this is future of healthcare
@Always Bullish cfo Kehoe James just disposed shares 5 1 2023
Mo_Hawk profile picture
Thank you for the article! I too expect little upside for the share price in the next 12-24 months, perhaps even slight red figures for the share price. I will use this time to buy more shares.
No Guilt profile picture

While you wait to time the market, shareholders get paid 5.4% to wait.
Waterside Insight profile picture
@No Guilt In the meantime, there are savings accounts paying 4%+ and rising.
No Guilt profile picture
@Waterside Insight

This is a dividend aristocrat with a double digit earnings yield.
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