One Wall Street Analyst Believes Walgreens Boots Alliance Stock Has 87% Upside

For retail drugstore companiesWalgreens Boots Alliance (Walgreens) Boots Alliance (NASDAQ resonance stock code: WBA)It has been a difficult decade for investors in the stock. The stock has been on a downward trend for many years as market sentiment has remained depressed.

An analyst at TD Cowen remains optimistic that Walgreen's shares could rebound sharply. Although TD Cowen cut its price target from $37 to $35 today, it still maintains a Buy rating on the stock. Based on the current share price, the new price target implies an upside of about 87%.

Favorable Risks/Mirrors

While analysts at TD Cowen do not expect Walgreens' performance to necessarily improve, a favorable risk/reward trade-off underpins the stock's high price target. Walgreens narrowed its full-year performance guidance in March to reflect the "challenging U.S. retail environment" and a number of other issues, and TD Cowen believes this new target is achievable.

Walgreens now expects adjusted earnings per share in 2024 to be in the range of $3.20 to $3.35, while continuing to expect adjusted EBITDA from its U.S. healthcare business to break even. Walgreens' business performance has fallen off a cliff over the past few years. Walgreens reported adjusted earnings per share of $4.91 for 2021.

Although earnings are declining, analysts at TD Cowen see a lot of potential upside if the company meets its targets. At the midpoint of Walgreens' guidance range, the stock trades at a price-to-earnings ratio of less than 6.

Is Walgreens stock worth buying?

Walgreens Stock Price Surge 87% It's certainly possible, but buying the stock simply because its valuation has been beaten down could be disastrous. Walgreen's stock has looked cheap for years, and the only reward investors get is a stock crash.

Walgreens could be a solid turnaround. The company appointed a new chief executive in October, and he's already made some tough decisions, such as cutting the dividend to preserve cash. But the stock still looks risky.

Should you invest $1,000 in the Walgreens Boots Coalition now?

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Timothy Green does not own any of the shares listed above.The Motley Fool does not own any of the shares listed above.The Motley Fool has a disclosure policy.

A Wall Street Analyst Says Walgreens Boots Alliance Stock Has 87% Upside was originally published by The Motley Fool.