March 23, 2023

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Why Walgreens Boots Alliance stock is soaring today

what happened

You can’t keep a good stock down, and it was quite clear on Friday that dozens of investors are considering that Walgreens Boots Alliance (WBA 4.04%) to be a good stock. A day after they were hit with a quarterly earnings report that many felt was below par, shares of Walgreens rose 4% on Friday. beat Standard & Poor’s 500 The bullish index is 2% in excess.

so what

A lot of this was a “really wasn’t that bad” re-evaluation of Walgreens. First quarter of fiscal year 2023 The results were revealed Thursday morning.

Late in the trading day, the stock had gained nearly 8% of its price. Investors were worried about the company’s lower year-over-year sales for the period and its lackluster guidance for the full fiscal year (although it did slightly upward revise its revenue forecast). Management has also admitted that it will abandon its recent strategy of growth through acquisitions.

As is typical when a company delivers a less inspiring quarter, many analysts got more bearish — albeit slightly — on Walgreens’ expectations after the earnings release.

On Thursday, Evercore ISI’s Elizabeth Anderson cut its price target on healthcare stock to $36 a share from $40 previously, maintaining an inline (read: neutral) recommendation. The next day, her classmates A.J. Rice in Credit Suisse And the c. B. Morgan ChaseLisa Gale followed suit. Both previously pegged the stock at a fair price of $42 per share. Rice lowered this to $41, while Gil went an extra dollar to $40.

What now

Markets are often overreacting at the moment, and that seemed to be the case with Walgreens on Thursday. This batch of earnings hasn’t been one for the ages, sure, but it wasn’t worth the sell-off it generated. The investor “correction” on Friday was quite understandable.

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JPMorgan Chase is an advertising partner of The Ascent, The Motley Fool Company. Eric Volkman He has no position in any of the aforementioned shares. The Motley Fool has and recommends positions at JPMorgan Chase. The Motley Fool has a file Disclosure policy.