It's rare when a well-capitalized stock is poised to nearly double. According to one market prognosticator, Walgreens Boots Alliance(NASDAQ: WBA) is one of those elusive creatures -- even though the analyst actually lowered his price target on the shares recently. The pharmacy chain operator is irresistibly cheap at current valuations, and its full-year guidance is realistic, in his view.
A slight price target cut
In early April, TD Cowen's Charles Rhyee made the price target cut. Well, actually, it was more like a shave. He reduced it by $2 to $35 per share. Given that the latter is 89% higher than Walgreens's most recent closing stock price, it nearly goes without saying that he maintained his existing buy recommendation on the company.
Rhyee's adjustment came mere days after the pharmacy company unveiled its second quarter of fiscal 2024 results. It managed to grow both revenue and non-GAAP (adjusted) profitability, and as a bonus, both line items came in notably above the consensus analyst estimates.
Not all was sunshine and roses for Walgreens, however. The company lopped off the top end of its adjusted net income guidance for the entirety of fiscal 2024; it now stands at $3.20 to $3.35 per share, where formerly the range was $3.20 to $3.50.
Big expectations to fulfill
Walgreens certainly looks inexpensive based on some of its valuations. For example, its price to sales ratio is 0.1, while its forward price to earnings ratio is a shade over 6. But a cheap stock isn't necessarily a high-potential one, and the pharmacy sector is a challenging one that doesn't feel as if it's loaded with growth potential. As such, I'm not as bullish on this company's future as Rhyee currently is.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
