Goldman Sachs Cools On WBA Stock Ahead of Earnings

The pharmacy concern will report earnings next week

by Lillian Currens

Published on Dec 14, 2018 at 2:49 PM
Updated on Jun 24, 2020 at 10:16 AM

A downgrade from Goldman Sachs has shares of Walgreens Boots Alliance Inc (NASDAQ:WBA) reeling today. At last check, the stock is 3.7% lower to trade at $79.27. The analyst cut WBA to "sell" from "neutral," citing a deteriorating retail pharmacy business and "issues facing core growth drivers." Goldman also slashed its price target on the stock to $68 from $73 -- a more than 17% discount to Thursday's close at $82.32. What's more, the blue chip is reporting earnings next week. 

Prior to today, WBA shares had been climbing steadily upwards since a post-earnings bear gap to annual lows on June 28. In fact, the stock touched an annual high of $86.31 earlier this month. However, today is the first time since mid-July that WBA stock is set to end beneath its 40-day moving average, a trendline that has acted as a solid line of support during the equity's five-month climb.

Goldman Sachs isn't the first brokerage firm with an icy take on Walgreens stock, with just four of the 17 analysts handing out a "buy" or better rating. Plus, the consensus 12-month price target of $78.23 now represents a slight discount to WBA's current price.

Options traders have been unsurprisingly bearish today, too. WBA has seen roughly 4,200 puts change hands -- 32% over the average intraday pace -- compared to 3,400 call options. In fact, even before today, options traders were much more put-heavy than usual. WBA's 50-day put/call volume ratio of 1.15 on the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits in the 84th percentile of its annual range, hinting at traders' recent proclivity for pessimistic positions. 

 


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