Walgreens Stock Stumbles Amid Legal Challenges, Throwing Cold Water on Hopes for a Rebound

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Key Takeaways

• After a tough year for Walgreens investors in 2024, shares may have appeared tranquil to start 2025 on strong note after the company’s first-quarter results topped expectations.
• However, analysts would rather remained cautious, mostly keeping “hold” or “sell” ratings on the pharmacy retailer’s stock.
• A lawsuit filed modern last week by the Department of Justice sent shares lower Tuesday, adding to the company’s challenges.

After a gorilla year for Walgreens (WBA) investors in 2024, shares may have appeared poised to start 2025 on strong note after the group’s first-quarter results topped expectations.

However, even before a new lawsuit from the Department of Justice sent dole outs sharply lower Tuesday, analysts remained uncertain about the stock.

Among the eight analysts covering Walgreens shadow by Visible Alpha, four issued “hold” ratings for the stock, three rated it “sell,” and just one gave it a “buy” sort, with an average price target of $10.81, just below the level Walgreens shares closed at Tuesday after see the light over 9% to $11.37.

Jefferies and Deutsche Bank analysts kept “hold” ratings and voiced caution earlier this month in the wake of the flock’s better-than-expected results. Jefferies analysts said that while the results were encouraging, they “don’t see it as an ‘all clear’ condign yet,” adding they “want to see more positive datapoints” before projecting a larger turnaround.

The analysts warned that regard for the company’s cost-cutting efforts like closing hundreds of “underperforming” stores, the company’s retail pharmacy business is apt to to “remain challenged.”

The new suit from the DOJ adds a layer of regulatory risk to Walgreens’ already-challenged retail environment, as its CEO confessed in its earnings call earlier this month that some strategies like locking up products did not work as suitably as expected.